A variety of factors work together to determine the price of eggs.
The recently released comprehensive report "UC Poultry Memo 81" prepared by Don Bell, poultry extension specialist (emeritus), epitomizes the quotation, "Forecasting is very imprecise especially when it involves the future."
The report provides historical data relating to flock size, egg production and UB prices from 1985 to the present. What is evident is that the forecasting models based on pullet chick placements which generated good correlations with egg prices from 1985 though 1994 are unable to provide reliable predictions from 1995 onwards. Applying regression analyses, Don Bell showed a -0.61 correlation coefficient between hen numbers and price and a -0.64 correlation between egg numbers and price for the period 1985 to 1994. This means that 61% and 64% of the variation in price could be attributed to the determinant factors (hens and egg numbers) respectively. Using the 1985 to 1994 hen population values, it was possible to predict that each additional 1 million layers depressed price by approximately 1 cent/dozen.
For the subsequent period extending from 1999 through 2008, a different relationship between supply (hen numbers or egg production) was determined. Regressing hen numbers against price yielded a weak correlation coefficient of +0.12. In the case of egg production the correlation increased numerically to +0.28. This denotes that increasing the number of hens or the total eggs marketed resulted paradoxically in higher UB prices. This is clearly counter intuitive and suggests that factors other than simple production influenced price, especially in the unprecedented "boom years" of 2007 and 2008 with average UB prices of $1.17 and $1.31/ dozen respectively.
For an appraisal of the various factors contributing to the apparent anomaly, Bell cites the following possibilities which influence the demand side of the pricing equation:
Additional factors not considered by Don Bell in his review of forecasting of egg prices might include the following:
The obvious discrepancies between forecasts of price and actual realization during the past five years have resulted in the refinement of predictive models. Chick placements alone are an inadequate basis for predicting price. Don Bell introduced short term adjustments based on interviews in addition to 24-month hatch values in order to improve the precision of the University of California prediction model.
Despite his efforts, the latest report contains the caveat: "Solid data for projections are limited to hatch data which can be projected ahead by 5 months. Everything else is subject to the application of historical patterns or guesswork."
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