How long will the price of eggs go up? Uncovering the hidden worries behind making money in bull market

 How long will the price of eggs go up? Uncovering the hidden worries behind making money in bull market

A large supermarket glass automatic door in Pudong New Area of Shanghai opened at 8 oclock in the morning. I came late yesterday, but I didnt get the special eggs. I must be the first one to rush in today. On October 30, Li Chunmei, who rushed into the gate, said.

One catty and three hairs. Li Chunmei holds two bags of eggs in her arms, remembering that the membership price of the previous two days was 5.6 yuan. At this time of the past year, when the weather was cold, the price of eggs fell. This year, its a bit unusual. Its generally sold for more than six yuan outside. Li Chunmei told reporters that she had never seen such a situation this year.

Five kilometers away from Li Chunmei, there is a steady flow of cars in front of the Shanghai Agricultural Products Center Wholesale Market (hereinafter referred to as shangnongpai) located at No. 2000, Hunan Road, Pudong. This is the largest comprehensive agricultural and sideline products wholesale market in Shanghai. On that day, the retail price of eggs here also sold to 6.3-6.5 yuan per kilogram, with a weekly increase of more than 10%.

Wang Guichuan, an egg dealer from Yancheng, Jiangsu Province, is one of the suppliers of shangnongpai. He links demand and supply at the same time. He is watching the price of a basket of eggs increase by an abnormal 23% since October. The enthusiasm of the farmers in his hometown in Northern Jiangsu made him believe that the eggs could rise for another period of time. Once in a century, the market is so good. Wang Guichuan sighed.

A runaway egg is telling the money making effect behind the bull market, but there are also worries.

Abnormal price high

Two trucks, more than 2000 baskets of eggs, run from Yancheng to Shanghai in four days. Wang Guichuan, who seems to be in his early thirties, has been involved in the purchase, transportation and sales of eggs for ten years. On October 30, when the reporter of the Economic Observer saw him, he was busy unloading the goods in the agricultural batch.

It used to go up and down. This year, the price of eggs is too high. Wang Guichuan told the economic observer with a strong northern Jiangsu accent.

Generally speaking, egg prices tend to show seasonal characteristics, and the festival effect produces several important price fluctuations in a year. The mid year egg price shows the characteristics of high point before the Mid Autumn Festival, sub high point before the Spring Festival, and staged callback after the festival.

But this years particularity is that the egg price has been at a high level for a long time, and the range and frequency of rise and fall are much higher than that of previous years. In particular, after the national day, the egg quickly rebounded to a high level after a short callback, and has exceeded the level of the years high point before the Mid Autumn Festival. Wang Guichuan revealed that the price of eggs he sold was still 128 yuan a basket on October 1 (26.5 Jin a basket). On October 30, the price rose to 157 yuan, 23% a month, 43% higher than 110 yuan at the beginning of the year.

From the perspective of Beijing, according to the data of the national agricultural business information public service platform, on October 30, the price range of eggs in Beijing wholesale market was from 10.6 yuan to 12.6 yuan per kilogram, and the price in Xinfadi agricultural wholesale market was 12.07 yuan per kilogram, up 28% from 9.44 yuan per kilogram at the beginning of the month. This is a situation that has never been recorded before.

Capital has a more astute sense of smell. On October 28, the main contract of egg futures hit the limit, rising to 4925 yuan / 500kg, the highest level in more than five years since August 2014. In addition, wind data shows that as of the close of October 30, the chicken industry index has risen 26% in October.

The reasons behind it

Why does the price of eggs go up? The price of pork is too high. Now its more than 30, 40 Jin. Wang Guichuan pointed out the important reasons behind the rise of egg price.

It is understood that about 1 / 10 of the agricultural and sideline products sold in the Shanghai market come from Yancheng, especially the vegetable basket of Shanghainese whose eggs have become popular. Wang Guichuans hometown, Dongtai City, managed by Yancheng, keeps 50 million poultry all year round, which is a butterfly that affects the price of eggs in Shanghai.

Chen Gensheng, the legal representative of an egg and poultry cooperative in Dongtai, has been engaged in the chicken industry for 35 years. He told reporters that at present, the output of eggs in the cooperative has not kept up with the sales volume. Affected by the rise in pork prices this year, the prices of eliminated chickens (i.e. those that are unfit to be reared due to the decrease in egg production rate and egg quality) have reached a record high. There are more chickens to be eliminated, and the interval between them cant keep up, forming a big gap. According to Chen Gensheng, the number of layers raised by the cooperative in a year is over 100000. Driven by the profit of eliminating chickens at a high price in early October this year, the cooperative has eliminated three out of ten layers in advance, resulting in a sharp drop in egg production.

According to previous years, Chen Genshengs cooperative society began to collect chickens in the first half of new years Day (i.e. chickens that fail to meet the standards will be eliminated in the chicken farm). This years time is much earlier. We are still collecting chickens now, and we can only calculate the money when we have it. If we wait for a bird flu in winter, it will be boring. Chen Gensheng told reporters that in the long run, its still worth selling eggs, not chickens. But considering the threat of bird flu in winter, a chicken can sell for 50 or 60 yuan now, and then it may only sell for a few yuan.

Kong Hailan, an agricultural products analyst at Everbright futures, told reporters that the price of pork rose sharply this year, the overall price of animal protein commodities rose, and the effect of egg substitution increased. In addition, affected by the continuous rise of pork price, the price of eliminated chicken keeps reaching a new high. Some farmers go out in advance to find out the old layer to lock in the breeding profit and reduce the number of laying hens on hand.

According to the Ministry of Commerce, the wholesale price of meat continued to rise in the week from October 21 to 27. The prices of beef and mutton were 65.81 yuan and 62.73 yuan per kilogram, up 1.2% and 1.7% respectively; the prices of pork were 51.21 yuan per kilogram, up 11%; the prices of eggs and white striped chicken were 11.67 yuan and 20.22 yuan per kilogram, up 5.3% and 5.2% respectively.

On the whole, the price of pork rose significantly, further approaching the price of beef and mutton. As an alternative consumer goods, the price of eggs and chicken also rose.

Amazing profits

Eggs, chicken prices skyrocketed, chicken industry chain who is making money? Wang Guichuan disclosed to the economic observer that as a dealer, a basket of eggs is usually charged with 5 yuan / basket of freight from purchase to delivery to the wholesale market. In the light and peak seasons, he keeps a four-day round-trip delivery cycle, and the rise and fall of egg prices have little impact on him.

The reporter learned from the merchants of shangnongpai that a basket of eggs usually rises by 3-5 yuan according to the purchase price. Take October 30 as an example. For a basket of 157 yuan eggs, the purchase price is 152 yuan, and the sales price in shangnongpai is 160-162 yuan. The price of two links rises 8-10 yuan per basket, which has become the industrys default rule.

Chen Gensheng, who is far away from the front line of breeding, is the ultimate beneficiary of this egg bull market. This years farming profits are at an all-time high. Chen Gensheng, who has 35 years of chicken raising experience, confessed to the economic observer that the breeding cost of a basket of eggs is about 90 yuan. According to the sales price of 157 yuan of dealers on October 30, the net income of a basket of eggs for farmers is 62 yuan, up 114% year on year.

I used to sell 50 or 60 cents of a kind of egg, but now I have more than 2 yuan. The market demand suddenly increased, and Zhang Tians eggs were not enough for sale.

In addition to the surprise of the egg price for the farmers, it is even more surprising to break through the history of the elimination of chicken price. Zhuo Chuang information data shows that the annual average price of eliminated chicken in 2017 is 3.8 yuan / Jin, which is a low in recent years. At present, the price of eliminated chicken has exceeded 11 yuan / Jin, which is a record high in recent years.

The cost did not increase, and the pork gap was replaced by chicken and eggs. Zhang Tian said frankly that in such a big environment, the profits of the chicken industry chain were increasing.

Risks are piling up

According to Chen Gensheng, driven by high profits, the current egg laying enterprises in Northern Jiangsu are highly motivated to supplement chickens and expand production capacity, and the orders for chickens in the chicken farm are generally delayed for one month before delivery. The supply of chickens is in short supply, and the price has reached 7-8 yuan / feather, three to four times that of previous years.

In the face of the continuous hot market and the enthusiasm of the farmers for expansion, Zhang Tian seems to be particularly calm. The breeding plan is still in accordance with the original rhythm: elimination of the right age, stable production, strengthening management, and maximizing benefits. In the past 20 years, Ive seen several ups and downs in the chicken industry, which is quite bearish. Zhang Tian clearly remembers that after the Spring Festival in 2017, her familys eggs sold for 1.8 yuan a Jin. At that time, the cost price was 3 yuan a Jin. Every Jin of eggs produced would lose 1.2 yuan. In three or four months, she was losing money. The price of eggs and eggs is skyrocketing. In Zhang Tians view, we are working together to fill the pork gap and increase the output. There should be no problem before this year, but with the expansion of breeding scale and the filling of pork gap step by step, we dont know where the balance is. Zhang Tian told the economic observer that the market is characterized by a gradual rise and a sudden fall, but he does not know the specific time point.

Wang Guichuan, an indispensable part of the egg chain, still commutes between Shanghai and Yancheng in four days. He doesnt know how long the price of eggs will rise.

(at the request of the interviewee, all the characters in the article are pseudonyms)

Source: editor in charge of economic observation network: Yang Zeyu ufe63 nf6036