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Despite opportunity for strong margins in the U.S. poultry and egg industry, producers are uneasy as they face what may be the sector’s most challenging period ever. Highly pathogenic avian influenza is now a persistent threat to production. Through January 2025, the U.S. egg industry now has 8% fewer egg-laying hens than it did three years ago as affected flocks are depopulated. In that time, more than 100 million table-egg-laying hens have been affected.
Consumer egg demand has surged in recent years, but production is not keeping up. From 2016-2019, per capita egg consumption grew 20% by more than 40 eggs per year to 300. Further complicating market conditions, consumer demand has shifted to specialty eggs, including “cage-free.” As demand has outstripped supplies, egg markets have become increasingly volatile, and prices have jumped 250% since 2019.
Source: LMIC, USDA, BLS, CoBank Calculations
HPAI is widespread, seasonality is gone
Prior to 2022, the last widespread impact of HPAI to U.S. commercial poultry and egg production was in 2015, when more than 40 million table-egg-laying hens (13% of the total U.S. commercial flock) were affected. During that outbreak, reports of HPAI were most severe during the winter and spring migration periods, but then the summer heat helped dissipate detections in both commercial and wild fowl.
HPAI is not new to U.S. flocks, but the persistence and prevalence of this outbreak is concerning. HPAI has been found in all 50 states and detected in either birds or other species including dairy cattle in nearly every month since the outbreak began in February 2022. In just the last three months, (Nov. 1, 2024 – Jan. 31, 2025), 45 million birds have been affected.
Of the birds that have been depopulated since Nov. 1, 70% (31.5 million) were table egg layers. USDA reported the active commercial table-egg-laying flock at a total of 311 million head on Nov. 1, suggesting that 10% of the laying flock was affected during this period due to HPAI. However, commercial operators are hard at work repopulating barns, as evidenced by USDA’s estimate of a productive laying flock at 306 million hens as of Jan. 1.
Source: USDA-APHIS, CoBank calculations
Cage-free commitments complicate the situation
Over 120 million, or roughly 40%, of the table egg layers in U.S. commercial flocks are housed in “cage-free” production systems. This compares with just 30 million layers in 2015, during the last outbreak of HPAI. Some analysts have suggested that birds in cage-free housing are more susceptible to HPAI, while others contend that most cage-free housing utilizes modern systems with increased biosecurity that actually mitigates susceptibility.
Regardless of opinions on HPAI production risk, the growth in supply of cage-free confinement is a direct result of corporate commitments and individual state legislation that caught on in 2014-2017. At the time, proponents of the movement were focused on meeting cage-free obligations rather than supply assurance. Some studies conducted in 2017 suggested that these cage-free sourcing requirements for corporations would require nearly 220 million cage-free laying hens by 2025-26.
With production already well below those implicit market targets, cage-free demand has outstripped supply in recent years. The loss of production related to HPAI outbreaks has further exacerbated market imbalance. On top of that, most cage-free production is usually contracted annually under fixed or cost-plus prices, which currently pencils out well below open market prices for conventional, or any, shell eggs.
As an example, HPAI detected in flocks in California affected more than 9 million commercial egg laying hens from Nov. 12-Dec. 31, 2024, significantly impacting California’s commercial egg production. Given that typical demand for eggs requires about one laying hen for every human in the U.S., the 39 million residents in California were already relying heavily on production from other states. However, HPAI has made the situation much more dire when looking for eggs on shelves.
California is just one of nine states that have enacted laws that require eggs sold in the state to be from cage-free hens. (The other eight states include Arizona, Colorado, Massachusetts, Michigan, Nevada, Oregon, Utah and Washington.) Combining the population from all of the states that are sourcing only cage-free eggs would require more than 70 million egg laying hens which is more than 50% of the total cage-free U.S. flock according to USDA on Oct. 1, 2024.
Source: USDA Economics, Statistics and Market Information System
Consumers are bearing the brunt of the situation, with no end in sight
From the early 2000s through 2012, egg demand was relatively constant. Per capita consumption averaged 255 eggs annually. Egg supply and demand was quite predictable as retail feature activity picked up ahead of Easter, back to school and Thanksgiving/Christmas.
But around 2014, emerging marketing and consumer trends significantly influenced egg demand. The emergence of all day breakfast was revolutionary and boosted egg popularity with U.S. consumers. Eggs became a staple item for innovation in entrees. One example of the extreme popularity was the introduction of a “breakfast waffle taco” where the taco shell was made of eggs, at one quick-serve-restaurant (QSR). Consumption quickly rose to nearly 300 eggs per capita through 2019. Seasonality remains an influencing factor, but egg use has grown drastically over the last 20 years.
Consumer prices from the early 2000s through 2019 hovered between $1.00-$2.00/dozen. Through a confluence of market factors, egg prices have become highly volatile after many years of price stability. While consumers confined to their homes during the Covid-19 pandemic influenced egg use from 2020-22, the return of HPAI has at times depleted availability and subsequently eroded per capita egg consumption. Market conditions have been more erratic than ever before.
Source: BLS, CoBank Estimates
Long gone are the days where eggs could regularly be found on ad for $1.00/dozen. During 2024, prices consumers paid for eggs rose to $3.17/dozen on average, according to the Bureau of Labor and Statistics, up 13% YoY. Prices were highest in December, averaging $4.15/dozen, up 65% YoY.
While BLS has not yet published January prices, wholesale (or spot) egg values continued to surge through January with conventional egg prices rising to more than $7.00/dozen in Midwest markets, suggesting that prices paid by consumers will continue to rise through the first quarter of 2025, if not longer.
Conclusion
While total egg-laying hen inventories have not been substantially depleted from where they were at the beginning of the current outbreak, U.S. population estimates have continued to rise, and per capita supplies remain well below market demand. Expansion of specialty egg demand including cage-free variety has further exacerbated the impact of tight supplies and it does not appear that availability will return to pre-2022 levels anytime soon. Now with production hampered by HPAI and elevated egg use tied to Easter promotions just around the corner, it seems all but inevitable that prices will remain elevated for the foreseeable future.
Disclaimer: The information provided in this report is not intended to be investment, tax, or legal advice and should not be relied upon by recipients for such purposes. The information contained in this report has been compiled from what CoBank regards as reliable sources. However, CoBank does not make any representation or warranty regarding the content, and disclaims any responsibility for the information, materials, third-party opinions, and data included in this report. In no event will CoBank be liable for any decision made or actions taken by any person or persons relying on the information contained in this report.
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