Egg Report - 6th May 2012
At the time of writing, Monday 30th April, the market in the UK remains surprisingly strong, reflecting the continuing high retail demand for colony egg products since Easter. This is despite the progressively improving position on colony egg availability. Packers continue to have low stocks, and the position should start to improve during May when demand is likely to reduce with the hopefully warmer weather.
The wholesale import prices continue to fall despite the availability issues in some EU member states, with Poland being the weakest seller. There is a clear price tier within Europe, with Northern Europe being lower in price than Southern Europe. The import prices are now 20-25% lower than UK levels and this two-tier pricing will continue until surplus egg becomes available when UK prices will fall closer to the continental levels. It is believed that the continental prices have reached their lowest, and are now showing a tendency to rise.
On the free-range side, any surplus egg in the market is currently being absorbed to meet sales demand. It is also being cascaded to meet the short-fall on colony, which is currently and unexpectantly outstripping availability. Once colony restores a balance and is able to meet demand, then free-range egg should start to appear as a surplus in the market-place. This is likely to happen during the summer months.
The UK processing demand has fallen following Easter, and prices are slowly edging back in line with the drop in continental Ungraded for processing levels. There seems to be a lag in terms of this price reduction, as UK prices rose later in March than in the continental market. This price erosion should continue throughout May and June, but will still be at an unprecedented high level for the summer because of the underlying dynamics of the non-compliance issues throughout continental Europe.
The latest position on non-compliance is still not entirely clear. It is understood that Spain, Italy and Poland will be striving to meet the half-year dead-line in terms of taking-out all remaining non-compliant cages. However, the degree to which this lapses will dictate the effects on the market during late summer/early Autumn. It is believed that Brussels will continue to demand that these changes are made on time to clearly signal their rigorous enforcement - especially with the forthcoming changes to regulation regarding the pig industry looming.
August/September will be a key time, when we could start to see a repeat of the steep rise in prices experienced during early March throughout the EU. How strong prices are up until the Autumn will largely be determined by the level of demand for imports from Spain with their reduced supply-base and the on-set in June/July of their tourist season.
