Egg white prices breaking at last
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After a meteoric rise in egg white prices in 2013, values of those and some other egg products showed signs of cracking as the new year began. The surge was almost completely egg white demand driven, and the question is, how much of it will be demand sustained?
As has been well documented on these pages, demand for egg whites soared in 2013 because of new whites-only breakfast entrees from McDonald’s, Sonic, Dunkin’ Donuts, Subway and several other fast-food and casual dining chains, with additional offerings of whites-only frozen breakfast items in grocery stores, such as from Hillshire Brands, coming later last year. The new demand for whites-only items sent prices soaring for liquid, frozen and dried egg whites and greatly restricted the supply of whites available to processors for drying.
It may be difficult to determine trends during the Thanksgiving-to-New Year’s holiday period, but at least some market participants believe new egg white demand has peaked.
“I think we are going to settle out from where we were, but where I don’t know,” one Ohio egg processor said. “I expect prices will come off their peak and be sustained at some level, but I don’t know where the new norm will be.”
An egg processor in the Southeast noted buyers “were getting excited” about dried egg white prices falling to near $8-a-lb, a level nearly unfathomable a year ago when dried whites were trading around $5 a lb and had crossed the $7 mark only a couple of times previously in history.
Egg white prices soared from 65% to just over 100%, depending on the type, from late January/early February 2013 to early November. Dried and frozen whites then steadied at those highs through late December before declining as the new year began. Liquid egg white prices, which more closely mirror changes in egg prices, waivered in December.
Prices for dried egg whites, which are widely used in baking mixes and other applications, soared 80% to record levels near $9 a lb in late 2013. Prices climbed without interruption from a low of $4.65 a lb in late February 2013 to a high of $8.95 a lb in early November, before dropping modestly the first week of January. It was the first decline in 10 months.
Frozen egg whites followed a nearly identical pattern, posting gains of 65% from February to November then easing slightly in late December.
Liquid egg white prices doubled from January to a high of $1 a lb in late November but have since declined 20%.
Contributing to the decline in egg product prices has been a surplus of eggs at year’s end, resulting in sharply lower prices for both graded (retail) eggs and breaking stock. A combination of factors, including an end to the fall and holiday baking seasons, generally slower trade over the holiday period and weather contributed to the surplus, traders said.
“Chickens don’t give a hoot about weather or holidays,” one processor said. “As long as they are warm, they keep laying eggs.”
Average wholesale prices for graded eggs soared to what may have been record highs of $1.51½@1.64½ a dozen in December, then tumbled 24c the first week of January, according to the U.S. Department of Agriculture. When retail egg supplies become surplus, those supplies typically are offered to processors, which in turn pressures prices for breaking stock eggs.
Breaking stock prices peaked at just over $1 a dozen in mid- to late-November and had plunged 45% by the first week of January to levels that were at or near breakeven for producers.
Egg producers are able to adjust egg supplies fairly quickly (relative to other protein sources) and typically put hens into “forced molt” early in the new year so layers are ready for the typical surge in egg demand around Easter. Hens are taken out of production with large operations staggering the molt over a 10 to 12 week period, a trader noted.
“If you want to molt pre-Easter, you’re going to do it now,” an egg processor said. “We could go from surplus to shortage quickly.”
While the short-term egg oversupply added pressure to egg product prices, it will take a few weeks for the market to stabilize after the holiday and weather interruptions, especially in the case of egg whites, which also are adjusting to a whole new level of demand. Meanwhile, some processors still are reporting tight supplies of egg whites.
A Midwest processor noted his dried egg supplies remained tight and he has continued to limit shipments to regular customers and turn away new business.
“I don’t want to drop prices too much to attract more buyers,” he said.