You can’t make an omelette without breaking a few eggs, right?
Be extra careful now, though. Those broken eggs may cost you more pretty soon.
The recent bird flu outbreak is wreaking havoc on the nation’s poultry industry.
The USDA lowered its 2015 projections for egg supplies last week, saying that the discovery of bird flu in Minnesota, Iowa and other Midwestern states will constrain egg production.
Egg prices haven’t shot up at your local supermarket just yet.
Restaurants and other businesses get poached. It’s forcing food companies to change their food offerings.
Food distribution giant Sysco told Reuters last week that it was talking to its customers — big restaurants, hotels and hospitals — about possibly changing their menus temporarily until egg prices stabilize.
Food companies are clearly being forced to pay a lot more for eggs — whether it’s the whole eggs, or the packaged liquid yolk and whites and the frozen egg products.
Brian Moscogiuri, a market reporter for Urner Barry, said the wholesale price of “breaker” eggs (which goes into liquid packages) has gone from 63 cents a dozen to $1.52 since the bird flu outbreak became a serious problem in late April.
Urner Barry tracks the daily prices of poultry, eggs, meat, seafood and other food commodities.
Moscogiuri said that 10% of the total egg supply has already been impacted by bird flu concerns. About 30 million of the more than 300 million egg-laying birds in the country had to be killed.
The biggest impact will be on companies that use breaker eggs, Moscogiuri said. That’s because nearly 90% of the eggs taken out of production were meant for the egg processing market .
But the price of eggs still in their shells is creeping up too. Moscogiuri said that the wholesale price of a carton of a dozen eggs in the Midwest has gone from $1.19 to $1.78
So what does this mean to you? The price of products with eggs as a key ingredient, such as mayonnaise, salad dressings and cake mixes, could eventually spike.
The higher liquid egg prices could put pressure on restaurants that use liquid eggs in breakfast sandwiches to raise prices too.
Moscogiuri doesn’t think price hikes are imminent though.
“It usually takes time before companies decide to pass on higher costs to consumers,” he said.
Egg suppliers react. But the problem may not go away anytime soon. One egg supplier is very nervous.
Cereal maker Post, which also owns the Michael Foods egg business, said last week that it is “unable to fully perform under its existing supply agreements with customers” because of the bird flu outbreak.
Post said that about a quarter of its egg supply has been impacted by the bird flu and that it may have to discontinue some products and raise prices.
Still, Wall Street is finding a way to profit from the egg shortage. A small Mississippi based company called Cal-Maine Foods is getting a lot of attention.
Cal-Maine’s ticker symbol is CALM. But it’s stock price has been anything but that. Shares have surged more than 50% this year, largely due to hopes that the price of its eggs will skyrocket.
The company sells eggs under the brand names of Egg-Lands Best, Land O Lake and Farmhouse. The company was not immediately available for comment about bird flu and egg prices.
Which came first? Higher prices for the chicken or the egg? Consumers (and investors) should keep an eye on the price of the actual birds as well.
The stocks of poultry producers Tyson, Pilgrim’s Pride and Sanderson Farms have been volatile lately as traders try to figure out how big of an impact the bird flu will have on their chickens and turkeys.
And Jennie-O parent company Hormel said on Wednesday in its latest earnings report that it ended the quarter with “substantial supply chain challenges” due to the bird flu.
That could make this year’s Thanksgiving dinner more expensive — especially if you use eggs to bind the stuffing or dressing you serve with the turkey.
