From the Wall Street Journal via MSN, February 18:
The nation’s biggest egg marketplace doesn’t own hens, farms or processing plants.
From an office building in New Hampshire, roughly a dozen people facilitate the trading of billions of eggs a year, a task that shapes what Americans pay per dozen at the supermarket or for omelets at diners.
The Egg Clearinghouse, or ECI, is little known outside the industry: It operates an online marketplace that allows participants to place bids on eggs listed for sale and see the results of trades. Only ECI members—farmers and egg buyers—are allowed to trade.
Lately, there are a lot more buyers than sellers using the “Wall Street of Eggs” with bird flu roiling the poultry market. And that is after last year marked the company’s busiest, trading over 2.6 billion shell eggs and 39 million pounds of egg product valued at more than $600 million.
ECI represents a sliver of the broader egg market—less than 5%—but plays a crucial role in providing eggs for those in need or having trouble getting them, and how they are priced.
“If you’re short on eggs, we’re the marketplace,” said Alan Munroe, president of ECI, a company overseen by U.S. egg producers and buyers. “We fill in the gaps.”
The brisk business comes as egg prices are scorching many Americans. Consumers on average are paying about $5 a dozen, a record high and double the price from roughly a year ago, according to the Labor Department. Supermarkets and other large-volume buyers are paying about $7 a dozen, making egg sales in some cases a money-losing proposition.
Demand has remained steady despite the high sticker prices, prompting some restaurants to add surcharges for egg dishes and consumers to step up purchases of liquid eggs or substitutes.
The deadliest outbreak of avian flu in history has resulted in the death of more than 100 million U.S. chickens, turkeys and egg-laying hens since 2022, according to the Agriculture Department. Once infections are identified in a single bird on a farm, whole flocks are often eliminated to prevent further spread, creating supply shortages in some regions and grocery stores.
For years egg-industry competitors relied on researchers visiting wholesale markets to set pricing benchmarks.
Egg producers and buyers set up ECI as an alternative way to price and trade the commodity versus larger exchanges that operated in New York and Chicago. ECI began brokering trades in 1971 and its board was made up of industry executives including Fred Adams Jr., the founder of the largest U.S. egg producer, Cal-Maine.
Similar to the stock exchanges, ECI doesn’t set a price for eggs. “The buyers and sellers determine the price, on our end we just facilitate that,” Munroe said.
The clearinghouse’s data helps research firms such as Expana set industry benchmark prices because ECI provides a window into the market not typically available, said Karyn Rispoli, managing editor of the egg division at Expana.
Most of the roughly 110 billion eggs laid by U.S. hens are contracted to commercial customers, ending up in places such as a Kroger supermarket, a Waffle House or a hotel breakfast buffet. Terms of those contracts aren’t public.
Through ECI, a buyer can bid for truckloads of eggs at a particular price. A farmer with eggs for sale responds with an offer. ECI collects a one-cent commission per dozen eggs it trades, regardless of whether the price is $2 or $8.
All trades are blind, and only after a deal does ECI allow the parties to know each other’s identity....
....MUCH MORE
Recently:
"Egg prices are surging, so why are chicken prices stable?"And 2009:
Mix Butter, Onions, Cheese and Eggs. Add Electricity...
For some reason, this post from Freakonomics got me thinking about the Chicago Butter and Egg board, the Butter, Cheese, and Egg Exchange of New York and Title 7, Ch. 1, § 13–1 U.S. Code*:
Lightbulb Moment in Food History
*Violations, prohibition against dealings in onion futures; punishment.Last week’s post talked about early-20th-century “egg gamblers” who bought eggs cheap in spring in order to sell dear in winter. Their kind of speculation proved not just controversial but also pretty risky, and ultimately doomed. Why?
Egg gamblers won only if they sold off their cold-storage stocks before fresh ones arrived in spring. They faced two major unknowns: housewives who sometimes protested egg “hoarding” with organized boycotts, and hens who might start laying earlier than expected. Because hens are acutely sensitive to shifts in daylight and temperature, all it took was a February thaw to set them off, sending egg prices plummeting.
Poultry farmers, meanwhile, just wanted to know how to get their own flocks to lay more eggs when fresh ones were scarcest and priciest. They knew that some chicken breeds laid a few more winter eggs than others, and that warm housing and a rich diet generally helped. But the most dramatic results came with the flick of a switch — literally.
Although few farmers in 1910 to 1920 had electricity, those who did discovered that hens couldn’t tell the difference between the sun and a light bulb....MORE
As with all things financial the scandals came first, the regulation followed, often to no good purpose.
I'll come back to butter and cheese next month. Here's a 1956 Time Magazine story "Odorous Onions" on the volatility of that market.
In the meantime here's a 1927 recording of "Big Butter and Egg Man..." by King Oliver's Creole Jazz Band, featuring Bessie Smith and Louis Armstrong
Probably not related:
"Find of the century? U.S. scrap dealer finds $20 million Faberge egg"
