Egg prices are rising rapidly. What is the reason behind it?
Speaking of the egg market in the first half of this year, it was truly "dismal." After the 2016 Spring Festival, retail egg prices kept falling, with only a small increase in May, rising from 3.8 yuan per jin in March to 3.9 yuan, before falling back to 3.5 yuan in July.
Right now, egg prices have bucked the trend and risen, with egg prices across the country all rising, and in some markets egg prices are climbing steadily, even changing from day to day. What is the reason for this rise? Will egg prices soar? Entering August, egg prices finally began to pick up. Egg prices in Rugao City, Jiangsu Province, rose strongly, and recently have been changing by the day. The average egg price at the three major farmers' markets in the urban area is 4.1 yuan, up nearly 8% from the same period last month. According to statistics from the Nanjing price information network in Jiangsu Province, eggs on the market generally sold for 4 yuan per jin last week, but this week they rose rapidly by 12%, up 6.53% year on year from last month. Zhuo Chuang Information analyst Xu Xin says that right now egg prices across the country have all risen.
Xu Xin: Recently, egg prices in the country's main producing areas and main sales areas have shown an upward trend. The weekly average price in the main producing areas was 3.43 per jin, an increase of 8.89% from the previous week; the weekly average price in the main sales areas was 3.63 per jin, an increase of 9.67% from the previous week. Driven by the holiday effect, supermarkets in various places are actively purchasing, and market circulation has accelerated. In addition, temperatures in various places are relatively high, and the laying rate of laying hens is still 5%-8% lower than normal levels. Large-size egg supply is relatively scarce, and there is a phased shortage of large-size eggs, so egg prices are higher. Although there is "praise of rising prices everywhere," overall the market still has not escaped its downturn. After the Spring Festival, egg prices slid all the way down, and in June the wholesale price fell below 3 yuan per jin, hitting the lowest price since 2015. Looking back at egg prices in the Shandong sales area in mid-to-late August in recent years, they were 5.15 yuan per jin in 2013, 6.09 yuan per jin in 2014, and 4.8 yuan per jin in 2015. By comparison, this year's egg prices are indeed not high.
Xu Xin: Compared with previous years, egg prices this year are generally at a low level, 7-8 mao per jin lower than last year. As of today, the national average price in August has fallen 18.94% year on year. Due to weak demand, food factories have purchased less than half of previous years' volume of eggs during the peak egg consumption season, and the momentum for egg price increases is insufficient. The "rocket egg" glory is no more. In the first half of this year, many laying hen farmers lost several hundred yuan a day, and those who could not withstand the pressure directly sold their laying hens to reduce losses. Some farmers told reporters that although egg prices have now risen, they are still low and simply cannot make up for earlier losses. As for this round of increases, analysts believe it is a seasonal rise that occurs every year. On the one hand, as the Mid-Autumn Festival approaches, downstream markets have begun actively stocking up; in addition, after schools start in September, demand for eggs will increase further. Based on previous years' market conditions, egg prices will keep showing an upward trend before the Mid-Autumn Festival.
Xu Xin: Since August 5, egg prices have begun to rise. Mainly affected by Mid-Autumn Festival stocking, most downstream market distributors are accustomed to stocking up in advance. At the same time, demand from food factories in some areas has improved, purchase volumes have increased slightly, and market circulation has gradually accelerated. Furthermore, most farmers concentrate on culling old chickens before the Mid-Autumn Festival, the number of old chickens on farms decreases, supply of large-size eggs is tight, and distributors have difficulty purchasing at low prices, so egg prices have entered an upward channel. As egg prices rise to a high level, downstream acceptance capacity is limited. Xu Xin says that this weekend market circulation is showing a trend of gradually slowing. Although the Mid-Autumn Festival is approaching, food factories and supermarkets currently mostly still purchase according to need, and distributors are also operating more cautiously. Supported by various positive factors, this round of egg prices may rise to the highest point in the second half of the year. Xu Xin: The eggs circulating in the market are still supply from earlier high-priced sources, and sales-area markets are mainly focused on digesting inventory. Industry participants are mostly waiting to see later market circulation. It is expected that next week, supported by the positive factor of schools starting and cafeterias stocking up, egg prices still have the possibility of rising, or may rise to the highest egg price point in the second half of this year.
Because laying hen raising is very fast, once egg prices fluctuate, farmers will raise laying hens even faster. Therefore, expecting another "rocket egg" scenario like in 2014 is basically unlikely. In August, high temperatures and rainy weather overlap, adversely affecting laying hen production. In addition, eggs are not easy to store in summer. Xu Xin suggests selling normally and by no means hoarding.
Xu Xin: Because breeding costs are relatively high in summer, it is suggested that farmers cull old chickens accordingly and pay attention to prevention and control of diseases in the flock. At the same time, under high-temperature weather, eggs have a shorter storage time and egg quality is difficult to guarantee. It is suggested that farmers sell eggs normally and by no means hoard them to gamble on price increases.
(Countryside Voice, Agriculture, Rural Areas and Farmers China)