Egg market report - Conditions 'deeply concerning'
At the time of writing, Monday 29th April, the only phrase to describe the current market conditions is ‘’deeply concerning’’. Although prices on the wholesale market had been edging down gradually since Easter, all that has now changed with a significant surplus position in the UK. This is a result of increased egg supply and has not been helped by warmer weather and the resultant lower retail demand. The consequence is that prices have moved from a premium to imports to a discounted position as sellers compete to gain wholesale market share. The situation has been made even worse by lower wholesale demand and wholesalers having high stocks of forward bought imported eggs. The currency situation, although still not back to January levels, is favouring imports more than a few weeks ago.
Wholesale prices are currently 32% lower than at the same point in 2010 when the UK faced a similar position with a high flock base and levels eventually hit 30p/doz in the summer; this would be a serious issue if this re-occurred with our current feed prices. The rate at which prices continue to fall throughout the summer will now depend on how rapidly flocks can be depleted early in the face of high feed costs. It is expected that during May continental prices will fall further and drag UK prices down. The seven major EU egg producing countries are forecast to increase their total flock base by 5 million birds by June of this year, so unless this volume of hens is depleted this will only add to the current issues. This projected flock base figure is perilously close to the high level of 2010.
Free-range currently has swung back into a large surplus position and this looks set to continue for the next few months. The lower current demand will inevitably lead to the need to cascade egg into colony .
Processing demand has improved marginally, but UK prices are now under extreme pressure to fall with continental prices starting to weaken again. Continental processors have reduced their demand, especially for powder production, until prices fall back to previous pre-Easter levels.
The latest position on the non-compliant cage removal centres on Italy and Greece; both countries have now been taken to the European Court of Justice over their failure to correctly implement the EU directive banning ‘’un-enriched cages‘’ (battery cages). It is also understood that the Italian government has made it clear to their egg industry that it would take action against any producer that has not commenced changing their conventional units by June 2013. We will need to see what traction these initiatives will have in removing the circa 20 million birds left in old cages and the effect this will have on the egg supply position in the coming months.
