At the time of writing, Monday 1st July, the market continues to be in a weak and unsettled position. Since the start of June the prices have been moving up and down on a weekly basis in response to the level of surplus in the market. With the prospect of warmer weather for the next 4 weeks and school holidays being imminent, we can expect to see a further weakening into early August. Although some packers have depopulated early to reduce the supply position, this would need to be more widespread to impact the situation on surpluses this summer.
Wholesale prices for UK-produced eggs are not currently attracting any premium over imported egg, and during some weeks in June were in fact at a discount as packers competed for market share, possibly as a consequence of the declining retail market for colony eggs. Therefore, the wholesale market is being dictated by the prevailing import prices. Continental prices remain fairly stable but again may weaken with the upcoming school summer holiday period.
Free-range is still in a surplus position, but this is at a lower level than last month. The increase in retail promotions over the next few weeks should maintain this position. The concern is that once promotions are finished, the high level of surpluses will be back since the underlying over-supply position has not been addressed.
Processing demand, although still weak, is currently at a higher level than previously. This is due to continental ungraded prices remaining at a marginally firmer level fuelled by increased demand on EU processors for egg white powder from the Far East and Mexico. The AI issue in Mexico continues to be a major problem, putting increased demand for product on the USA. The demand for whole egg in Europe is still very poor and this is the main determining factor on UK price levels. Most traders and processors believe prices will fall as we progress through the summer and will not start to firm until September.
The latest position on the non-compliant cage removal has not changed significantly, but feedback suggests the Italian government are taking a strong line with their producers to commence removal of non-compliant cages by the end of June this year. The extent to which these producers act on this directive may have a significant effect on the EU supply position; if it happens rapidly then Italy will become a significant net importer over the next few months.
