September 4, 2024

 

A bigger rebound for Chinese egg prices after months of decline?

China's domestic egg prices fell from September 2023 to April 2024.

 

The wholesale price of eggs in some regions had dropped below ¥8/kg, with an average price of around ¥7/kg. In the retail market, the wholesale and retail prices of eggs in April 2024 were at ¥8.20/kg and ¥9.73/kg, respectively, down 21.76% and 16.05% from the same period last year.

 

Egg prices remained weak before China’s May Day holiday. The reason behind the prolonged decline in prices is an oversupply of eggs.

 

Since the second half of 2023, the population of productive laying hens in stock has expanded steadily and, thus, pushed egg production. Additionally, the sales of layer chicks increased last year by 11% year-on-year.

 

China's egg production then hit a record high last year, exceeding 30 million tonnes with a year-on-year increase of 3.1% — and higher by 2.7% compared with a historical high in 2020. Meanwhile, egg production in the first quarter of this year increased by 1.5% year-on-year.

 

While the Chinese egg supply was abundant, domestic consumption declined below expectations. With excessive supply overwhelming demand, egg prices tumbled, causing losses for the layer breeding industry.

 

In January this year, layer farms were barely making profits. Later, farmers suffered deficits, ending a 23-month period of profits. Farmers witnessed losses starting from February, which continued for three straight months.

 

Supply soon tightened as some family farms withdrew from the layer industry. As a result, egg prices spiked following the May Day holiday, taking a turn for the better. Since May 5, egg prices rebounded from low levels, surging nearly 20%.

 

Still, current egg prices are barely enough to cover feed costs, and layer farms are still in the red (the layer industry hence stays cautious of a price rebound).

 

Meanwhile, large-scale farms maintain a rise in their numbers, with the inventory of productive layers kept high.

 

The Chinese egg supply is expected to be sufficient in Q3. But, in the summer months after June, rising temperatures and increased rainfall, particularly in the country's south, may dampen the confidence of wholesalers amid weakening egg demands.

 

It is expected that egg prices may experience a strong rebound in mid- to late-July, strengthening towards September. Furthermore, in August and September, egg sales are set to strengthen with the coming Mid-Autumn Festival and October holidays.

 

- David Lin, eFeedLink