egg prices slightly increased in April, but it’s still fluctuating around the cost line.

With the weakening of the shock of COVID-19 in April, students of grade three in high school and junior middle school successively went back to school, and increased businesses resumed work. Driven by the consumption in the Tomb-Sweeping Day and the May Day holiday, egg demand rose to some extent. China’s inventory of layers is at a high level, and the proportion of layers in production is rising, leading to increased egg supply. As a whole, the production of companies has recovered to the normal in April, the consumption of eggs in catering and tourism was narrowing, and food factories purchased eggs at low prices according to their demand. In this month, egg consumption was still household based, and the recovery of egg demand was lower than the expectation. All these factors led to the oversupply of eggs, and egg prices fluctuated around the cost line.  
 
(1) China’s layer inventory was at a high level, leading to increased egg supply. According to BOABC’s monitoring data, in April, 2020, 82.84% of layers stocked in China were in production, increasing by 2.26% over the previous month; egg production reached about 1.79 million tons, up 2.26% month-on-month and 9.45% year-on-year.
 
(2) Greatly decreased egg demand led to great stock pressure. Among egg consumption, residents’ daily consumption, catering and canteen consumption, and industrial consumption respectively accounted for 56%, 26%, and 18%. As schools delayed the opening time, factories haven’t recovered to the normal operation rates, and tourism, hotels and catering consumption only saw slight growths, the consumption of eggs in these fields was lower than the normal. Although the household consumption of eggs increased to some extent, the overall demand for eggs dropped significantly, which led to great stock pressure in main producing regions, and some traders suffered losses.
 
(3) Egg prices fluctuated around the cost line. In April, the factory price of eggs in main producing regions averaged 5.91yuan/kg, increasing by 2.00% month-on-month, decreasing 17.14% year-on-year. The profit of rearing layers (excluding culled layers) was 0.26yuan per kilogram of eggs, growing by 0.30yuan/kg from the previous month and decreasing by 0.92yuan/kg from the same period last year.
 
It’s expected that China’s inventory of layers will remain high in the second quarter, and there will be more layers starting to produce eggs. Birds that were forced to molt during the outbreak of COVID-19 will fully enter the peak season of producing eggs. The stock of layers in production in May will grow to a high point of this year. Egg supply will continue to increase in the second quarter, but terminal consumption has recovered to the normal, so egg prices will slid. Due to the COVID-19 outbreak, farmers greatly reduced the restocking of layer chicks, which will make the number of layers starting production down in June. Then, the stock of layers in production may drop from a high level, and egg prices are possible to rebound.