Egg Market Update - 12th March 2013
At the time of writing, Monday 4th March, the market is stagnant. Since the last report, prices continued to increase up to Pancake Day and then declined marginally and have remained ‘flat’ ever since. We have yet to see the increase in demand ahead of Easter when packers need to bolster their stocks to meet the expected higher sales demand. The market is mostly being held back by lower import prices and enough egg being available to meet the current moderate sales demands. There are, however, definite signs that prices may start to move upwards and potentially create a premium over import prices. This is the situation for Colony egg, but Free-range egg still remains in surplus; even though this surplus is currently low due to the a number of retail promotions which are occurring.
Wholesale prices for colony are currently about 3% lower than their peak in the week before Pancake Day. To put this into perspective, these prices are almost 30% lower than the equivalent week before Pancake Day in 2012. Moreover, this current first week in March, prices are half what they were the same time last year. Import prices are currently higher due to the currency effect, and if we were still experiencing January exchange rates, they would be 5p/doz lower which would drag down UK wholesale prices. On the continent, despite the Egg Painting season, there is an increasing availability of egg and as a result prices are in fact falling as we move towards Easter. This was due initially to a large surplus in France and Spain, the majority of which was being absorbed by exports to Italy, but now Germany is also in surplus which is magnifying the effect. Prices on the continent for ungraded egg for processing are still weakening, and are currently tracking at a level 20% lower than early January. This situation is clearly heralding much lower prices post-Easter than first thought in the face of continuing feed cost pressures. We are yet to see the expected benefit of the Horse-Meat scandal as consumers move away from red meat to poultry and eggs which the latter also offers the trust and provenance of the Lion brand.
On the free-range side, although the market has improved since February, there is still some availability. This would be much higher if not for a series of retail promotions. The current scandal in Germany on Organic and Free-range stocking densities may lead to significant volumes being down-graded and farm sizes reduced. This could cause a price ‘spike’ for consumption eggs and improve wholesale UK import prices. The position post-Easter in the face of a reduced demand is looking bleak to say the least.
UK processing prices are still suffering from the combination of low demand and high stocks at processors. The signs of a recovery for March is now being hampered by a recent 10% fall in continental Ungraded for processing prices. This is due to the demand continuing to be low for processing and the full effect of the increased flock base across Europe. Free-range continues to command little or no premium over colony.
There is still no report out of Brussels on the action being taken against the countries still housing significant numbers in non-compliant cages. The number is still in the region of 20m birds, mainly in Italy and Greece. Even if these were removed it would only have a marginal effect on the market now since this volume will have already been replaced.
