Forward projections prepared by Don Bell of the University of California at Riverside, suggest acceptable prices in the coming year as compared to 2009. Despite a relatively stable production cost, prices slumped after Easter 2009 through the early fall months representing our summer of discontent, to paraphrase Shakespeare.
Most producers of generic eggs lost 20 to 25 cents/dozen in May and June and broke even from July to September. The only saving grace was a reduction in ingredient prices. This cost advantage is not expected to contribute to profits in 2010 since the world economy is recovering and the prices of crude oil and grains will escalate.
Based on the Forward Projection model, Don Bell predicts triple-digit UB prices through October, notwithstanding the post-Easter slump to 101 cents/dozen.
The industry is expected to show restraint in expansion with hen numbers during June and July attaining 278 million. It is evident that management of flock size is critical to maintaining profitability.
Short-term adjustments in the age of depletion of flocks and when initiating molt are established procedures to take advantage of transitory rises in unit revenue. The intermediate term approach to pullet placement and structuring rearing programs provides more efficient strategic options.
With consolidation in the industry and fewer producers making their independent decisions which impact total production, supply and demand should be closer to equilibrium than in past “boom and bust” cycles. This is analogous to the situation which has prevailed in the broiler industry where there is greater concentration of production.