Egg Market Report - 15th August 2012
At the time of writing, Tuesday 7th August, the market is influenced by the traditionally weak school summer holiday period, with lower retail sales and an increasing availability of both colony and free-range egg. The Olympics do not appear to be impacting significantly on demand.
The wholesale import prices have reduced during July and, combined with the favourable currency, this has necessitated UK egg matching this price closely to regain market share. The market is showing some signs of firming, but any significant impact on the market is unlikely to happen until schools return in September. The continent, although firmer than a normal summer period, has responded to the delay in removal of the old cages expected to occur at the end of July. We will have to wait and see if the drought in the US, AI issues in Mexico, and the very high feed costs have an influence on egg availability over the coming months.
On the free-range side, now that colony demand has fallen and revealed the true imbalance, surpluses are continuing despite the current retail promotions. The high volumes of smalls on the market over the past few weeks do signal a large number of new flocks coming on-stream.
UK processing prices have fallen back recently, based on import prices which reflect the lower demand, and also the effect of the delayed removal of old cage units. Continental food manufacturers are now back from summer shutdowns, which may herald an improvement in demand which will reflect later in August in an improvement in Ungraded for processing egg prices. UK processors currently have high stocks and it will take time before any continental price improvements reflect in a change in the UK position.
The position on the accessibility of American egg has now changed as they have extreme temperatures /drought which has led to a significant loss of birds. Any egg that is still available as a surplus to their domestic consumption needs is being moved to Mexico to assist them with their loss of supply linked to a severe and virulent strain of AI.
The latest position on non-compliance in the EU is a gradual reduction over the coming months, but the majority of egg is unlikely to be taken out until the end of the year. The more concerning situation is that new production is coming on–stream faster than expected, and may impact in a weaker, over-supplied market much earlier in 2013 than previously anticipated. The only potential ‘brake’ on this position could be the escalating feed costs and the reaction in terms of early depletion of non-compliant units and delays in investment for new units based on input costs.
