Egg Monthly Report: In just one month! Egg prices have risen sharply!
I. Overview of the Egg Market this Month
In January, domestic egg prices rose significantly. On the supply side, supply tightened due to a continued decline in the national laying hen inventory at the end of December, with new additions decreasing steadily. Although the pace of capacity reduction was slow, it did not hinder the overall trend. Meanwhile, relatively high feed costs also impacted farmers' willingness to replenish their flocks and their overall production enthusiasm. Demand, on the other hand, was strong, exhibiting typical pre-holiday peak season characteristics.The seasonal boost from increased stocking by food processing companies and increased purchasing by supermarkets before the Spring Festival was particularly strong. From a market perspective, egg shipments from major producing areas remained high, reflecting smooth downstream sales and strong demand, which significantly supported prices and drove a continuous upward trend in egg prices. Overall, egg prices continued to rise in January due to the combined effect of these factors.
Egg Price Index Trend Chart
II. Fundamental Analysis of the Egg Market This Month
2.1 Supply-side Analysis
In January, the egg market exhibited characteristics of sufficient basic supply but tightening incremental supply, with inventories at relatively low levels. The market's fundamental supply capacity was adequate, but the supply trend indicated that production capacity was continuously decreasing. Due to prolonged losses in the industry, farmers had little incentive to replenish their flocks, resulting in a limited number of new laying hens entering production in January.Meanwhile, inventory levels have provided some support to egg prices. This month, the average number of days of inventory in the production and distribution stages has mostly remained around one day, which is a historical low. Overall, although the production capacity is substantial, the reduction in market capacity in January is still progressing slowly.
2.2 Demand-Side Analysis
In January, the egg market exhibited strong seasonal demand, which was the main driving force behind the price increase this month. Specifically, the concentrated release of demand came from two main aspects: firstly, the traditional stocking season before the Spring Festival officially began, leading to a significant increase in the purchase of eggs as raw materials by various food processing companies.On the other hand, to meet the increased consumer demand during the holiday season, retailers such as supermarkets and e-commerce platforms have increased their purchasing and stocking efforts, driving up domestic demand for eggs from production areas and accelerating sales. Therefore, the egg market in January showed a typical pattern of both supply and demand being strong, but with demand slightly exceeding supply. The significant increase in seasonal demand was the key factor supporting the strong rise in egg prices.
III. Spot Prices of Eggs This Month
Price trend chart of eggs in major producing areas
Price trend chart of eggs in major producing areas
IV. Market Outlook
On the supply side, overall inventory is expected to continue its downward trend, but the pace of capacity reduction may slow down in the short term due to a slight improvement in farming profitability. However, with the end of the Chinese New Year holiday in February, a wave of concentrated culling of older chickens may be triggered, thereby accelerating the contraction of supply.
On the demand side, after peaking in January due to pre-Chinese New Year stocking, demand is expected to experience a significant seasonal decline in February and March, entering the low season for the year. Post-holiday household consumption will weaken, and bulk purchasing by schools and restaurants has not yet fully recovered, significantly reducing support for egg prices. Overall, the egg market is expected to face a risk of decline next month, with potential differences in performance between red and white eggs. The adjustment is expected to be around 0.15 yuan/jin, with the average price in major production areas ranging from 3.8 to 3.95 yuan/jin.
