Tomorrow, we’ll get a reading on January egg prices at the consumer level. With futures prices at about $5.2 in December and $6.65 in January, I’d guess retail egg prices will have gone up. Futures are at $7.65 so far in February.
This article was originally published by Econbrowser.
Figure 1: Top panel – Consumer Price of Dozen Eggs (blue, left scale), ERS forecast of January 2025 for end 2024 (blue square, left scale), both in $, and PPI for fresh eggs (tan, right scale), 1991M12=100. Bottom panel: Trading Economics futures price for dozen eggs (blue), and TradingEconomics model and analyst based forecast (gray). Source: BLS, ERS, TradingEconomics.com.
The USDA’s Economic Research Service January 2025 forecast indicates a $5/dozen price by end-2025. This forecast is based on a time series model. TradingEconomics’ forecast of $9.67/dozen futures price is based on their proprietary macroeconomic model, and analysts’ forecasts, of undisclosed weighting. However, their forecast clearly includes a judgmental component, such as egg-laying hen stocks, and projections of bird flu prevalence.
Could egg prices be lower by end-2025 than in January 2025? The ERS forecast 95% confidence interval encompassed a price reduction. I’m dubious, although a miracle could happen with respect to to bird flu (although I suppose we ain’t gonna get a vaccine super-fast with all the cuts to medical research the Trump administration wishes to impose). A catastrophic recession could also push down prices. However, since eggs are a staple — rather than a luxury good — this is hardly seems implausible.
Implications for grocery prices? My guess is that in the 2023 CPI weights, eggs account for about 2.2% of the food-at-home component of the CPI. A 13% December-to-December increase in egg prices accounts for a 0.3 ppts higher food-at-home CPI component.
Addendum: Betting on February egg prices up relative to January.
Source: https://kalshi.com/markets/kxeggs/egg-prices accessed 12:30 CT
https://kffhealthnews.org/news/article/bird-flu-egg-farmers-biosecurity-backyard-flocks-pandemic-risk/amp/
Two things to note with regard to government’s role in dealing with bird flu: 1) Farms rely on Department of Agriculture guidance in resisting the spread of disease. 2) Inoculation has worked to stall bird flu in the past and could be used now. Because poultry exports could be harmed, there is reluctance to vaccinate egg producing flocks. (Seems like this could be addressed somehow?)
Because government has the lead in determining how farms will deal with bird flu, this is a bad time for chaos at the Ag Department.