[madmax96]

>Egg supply is down

Egg production fell 6.6% [1]. Egg prices rose 60%.

The author knows exactly how markets work: Prices are high because there is not enough competition. Cal-Maine is tricking people into tolerating higher prices by loudly complaining about every small problem they face. They're literally bragging about it on investor calls.

[1] https://www.cnbc.com/2023/01/23/high-egg-prices-due-to-a-col...

[JoshuaDavid]

> Egg production fell 6.6% [1]. Egg prices rose 60%.

It seems plausible to me that the price elasticity of demand[1] for eggs is small - that is to say, even if the price of eggs doubles, people will only reduce their egg consumption by a small amount.

If the prices jumped by 60%, and now the shelves were full of an abundance of expensive eggs, that would be suggestive that the reason for the spike in price is pure profiteering.

But I have seen no evidence that a large number of eggs are going unused because prices have spiked. So I think it's plausible that the increased prices now really do reflect an increase in demand.

Eggs are a scarce resource. When the supply of eggs falls faster than the demand for eggs, the amount of resources required to obtain eggs will go up. Those resources can be money, or they can be time spent going from store to store searching for eggs, or they can be social connections in terms of knowing who can get you eggs and leaning on those connections. And those who have the ability to procure more eggs will now be able to demand more resources for those eggs.

You can say that it's unfair that Cal-Maine is getting a windfall here, instead of letting the grocery stores have a windfall, or instead of requiring people to burn time and gas looking for eggs while the price of the eggs they find remains the same. But I don't think you can say that Cal-Maine is the reason there is an egg shortage.

[1] https://en.wikipedia.org/wiki/Price_elasticity_of_demand

[madmax96]

>It seems plausible to me that the price elasticity of demand[1] for eggs is small

Agreed.

>If the prices jumped by 60%, and now the shelves were full of an abundance of expensive eggs, that would be suggestive that the reason for the spike in price is pure profiteering.

Price gouging, one form of profiteering [1], “is the practice of increasing the prices of goods, services, or commodities to a level much higher than is considered reasonable or fair.” [2]. The ability to sell product has nothing to do with price gouging.

Cal-Maine’s profit margin is up 7,890% year-to-year [3]. This is textbook profiteering.

>And those who have the ability to procure more eggs will now be able to demand more resources for those eggs.

What one can do is rarely what one should do. The people who can’t afford eggs could resort to violence. But where would society be then?

>or instead of requiring people to burn time and gas looking for eggs while the price of the eggs they find remains the same.

Or, like with toilet paper, meat, or several other essential items during the pandemic, groceries limit the amount of eggs customers can purchase to keep them stocked.

All this to say: We’re being fucked.

[1] https://en.m.wikipedia.org/wiki/Profiteering_(business) [2] https://en.m.wikipedia.org/wiki/Price_gouging [3] https://www.google.com/finance/quote/CALM:NASDAQ?sa=X&ved=2a...

[ofalkaed]

The majority of egg production goes to commercial production/food service/etc, the consumer gets what ever is left over so a small drop in production can be very noticeable at the grocery store.

[LorenPechtel]

The percentages are irrelevant. The smaller the elasticity of demand the greater the price change needed to bring supply and demand back in line. Most egg use is commercial and not easily changed, they simply pay the higher price and use the same number of eggs. Thus we see a sharp reaction in the area where egg demand is more flexible--consumers. The high egg prices drive some consumers to eat something else, bringing down the demand.

There isn't an oversupply of eggs--since egg prices went nuts I have seen many an empty shelf, never have I seen eggs on clearance.

[rajeshp1986]

Moreover, distributors probably won't bring down the price back to 2022 prices even if the production ramps up in coming months.