Egg prices were up 7.7 percent in December, and 10.7 percent over the past year, according to the Bureau of Labor Statistics. Two key causes for the jump in prices are the spread of avian flu in Mexico and new regulations for egg producers in California.
Demand for U.S. eggs from Mexico has picked up recently because avian flu in that country's birds has culled hen flocks, reducing Mexico's domestic supply. The jump in demand comes despite a strengthening U.S. dollar, which makes U.S. eggs even more expensive for Mexican importers.
Looking ahead, the extra demand from Mexico may be offset by bans implemented in the past few weeks on U.S. poultry products by China, the European Union and South Korea, despite the fact that no avian flu cases have been reported in the U.S. In addition, Mexico will likely be replenishing their hen flocks as quickly as possible. These developments suggest the surge in egg prices may be short lived.
The second cause of the recent surge in egg prices are new standards implemented by California, the fifth-largest egg-producing state in this country. California now requires that hens have enough space to get up and turn around. The new regulations have required many farmers to retrofit their henhouses; this increase in production costs has translated to higher prices, but is also likely to be temporary as these one-time retrofits are completed.