By Greg Iacurci -
CNBC
What changed in price first: the chicken or the egg?
Grocery prices are rising at their fastest rate in decades, and eggs are no exception.
However, the cost of chicken went down in October.
It may seem counterintuitive that egg and chicken prices have moved in opposite directions.
This is mainly due to a severe outbreak of avian flu in the United States, which has killed many laying hens but not affected chickens raised for meat production as much, economists say.
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“A lot of things have gone up since 2020,” says Bill Lapp, president of Advanced Economic Solutions, a consulting firm specializing in food economics.
"But the recent upturn is extraordinary both in shell egg sales and in egg products."
The price of eggs soared 10% in October, the biggest monthly increase seen for any food, according to the Consumer Price Index, released Thursday by the US Bureau of Labor Statistics.
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In comparison, the monthly prices of “food in workplaces and schools” rose 3.8%.
That increase was less than half the increase in eggs.
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Consumers paid a median of $3.42 for a dozen large eggs in October, up from $1.82 a year earlier, according to federal data.
Only margarine inflation (47%) has eclipsed that of eggs (43%) since October 2021, according to the consumer price index.
“Unprecedented” disruption to egg supply
The increase in egg prices is mainly due to one of the worst outbreaks of avian flu in the United States.
Some 50.3 million birds have been affected by the virus since the beginning of February, according to recent data from the Centers for Disease Control and Prevention (CDC).
These figures also include birds such as turkeys and ducks.
Bird flu is relatively rare in the country.
The last outbreak happened in 2015, when a record 50.5 million birds were affected, according to the CDC.
The flu hadn't hit like this in at least a decade or two before that, according to Lapp.
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Bird flu, usually spread by wild birds like ducks and geese, is "highly contagious," the New Jersey Department of Agriculture warned last month.
It's also extremely lethal, killing 90-100% of chickens, often within 48 hours, according to the CDC.
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Farmers
often have to kill the remaining birds, not out of choice, but because of federal regulations
aimed at preventing the spread, according to Brian Moscogiuri, global trade strategist at Eggs Unlimited, an Irvine, California-based egg supplier. .
As a result, about 37 million of laying hens have died since the beginning of 2022, according to Moscogiuri, who noted that they account for about 10% of production in the United States.
A shopper checks out a carton of eggs inside a grocery store in San Francisco, Calif., on Monday, May 2, 2022. David Paul Morris/Bloomberg via Getty Images
The number of eggs has also been reduced.
Some 8.8 billion eggs were produced in September, up from 9.7 billion in December 2021, according to the most recent data from the US Department of Agriculture.
“It is an interruption of the supply as if it were some kind of 'divine design'”, described Moscogiuri, who described the situation as “unprecedented”.
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According to experts, bird flu usually arrives during spring migration and disappears in summer.
But this year has been different: the virus reappeared in September.
In October, the Department of Agriculture lowered its forecast for egg production for 2023 and the rest of 2022 after detecting the bird flu outbreak in September.
The avian flu flare-up -- and the deaths of more laying hens -- comes just at peak demand season, when consumers are using more eggs for baking and holiday recipes, experts say.
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Consumer demand for eggs has also increased as consumers stop buying some more expensive proteins due to inflation, the Agriculture Department suggested in an October outlook report.
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High egg prices “could last until the first quarter of 2023,” according to Lapp.
Broilers are less affected by influenza than layers
Meanwhile, chicken meat prices eased in October, falling 1.3% over the month.
The wholesale price of chicken breast has fallen below $1.20 a pound (450 grams), a third of the peak of around $3.60 it reached in the summer, according to Lapp.
Chickens raised for meat consumption (known as
broilers)
are not affected by bird flu to the same extent as laying hens.
“They are two totally different styles of production, two totally different breeds of birds,” Moscogiuri said.
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The life cycle of broiler chickens is much shorter: between five and a half weeks and nine weeks, from hatching to slaughter, according to Vencomatic Group, a poultry consulting company.
However, the life cycle of a laying hen can be over 100 weeks.
Layers can take five to six months to reach full productivity, according to the Department of Agriculture.
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Therefore, the latter are more susceptible to contracting bird flu, since farmers must keep them alive for longer, according to experts.
The number of broilers has also increased, which has contributed to lower chicken prices in the markets.
For example, some 865 million broiler chickens hatched in August, up 2.9% from August 2021 and a monthly record, which had previously been set in March 2020, the Agriculture Department said.
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Despite the recent drop in its price, the cost of chicken remains high, 14.5% more expensive than in October 2021, according to the CPI.
The increase in the prices of basic products such as corn and soybeans (the main ingredients in the feed of these birds) has probably contributed to the rise in the price of chicken, as well as eggs.
