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Deadly Avian Flu Cases Surge, Sparking Concerns for US Chicken, Egg Prices

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A deadly avian flu outbreak has so far killed nearly 8 million chickens and turkeys on US commercial farms in eight states. While that’s a fraction of the poultry losses in the last major outbreak in 2014-15, a two-thirds increase in the death toll just this week is sparking concern over the potential price impact on chicken, turkey, and eggs. 

The current strain of highly pathogenic avian influenza (HPAI) is being monitored closely by government and industry bodies as it affects broiler, egg-layer, and turkey flocks in Wisconsin, Iowa, Missouri, Delaware, Indiana, and other states. HPAI has also been detected in noncommercial poultry and wild bird populations along the Atlantic and Mississippi River flyways. The US Centers for Disease Control has noted that the disease doesn’t present a public health concern. 

US chicken prices have so far reflected only a small bird flu premium. Wholesale broiler chicken prices were already at their highest level in at least 20 years on high consumer demand during the post-pandemic recovery. Heightened biosecurity measures put in place following the 2014-15 outbreak, and widespread testing and detection, may have increased confidence that outbreaks can be controlled. 

Wholesale chicken breast prices currently average $2.70 a pound, up just 6% from February 8, when the first HPAI case was reported in US commercial flocks. Cuts directed for export markets have increased by less — leg quarters are up 3% since February 8. Export-oriented cuts haven’t fully participated in the chicken-price rally, and prices are close to average for the past seven years. 

In the last major US bird flu outbreak, from December 2014 to June 2015, prices of broiler cuts for the domestic market rose sharply within six weeks of the first disease discovery. Chicken breast prices increased 17% to $1.75 per pound. However, export-oriented cuts declined, due to import bans on US poultry by countries including China, South Korea, Cuba, and Mexico. Consequently, leg quarters, for example, fell 18% to 36 cents a pound. 

In total, more than 50 million chickens and turkeys were destroyed to stop the spread of the virus in 2014-15. Poultry prices were affected for years, with the worst volatility occurring in the egg and turkey markets. One in 12 turkeys was lost to the disease, while 1 in 8 egg-laying chickens was lost. 

Some 50 million chickens and turkeys were destroyed to stop the spread of the HPAI virus in the last major outbreak of 2014-15, as shown by the spike in monthly death totals in this chart. Poultry prices were affected for years.

Producers responded by adding 30 million table-egg-laying chickens, expanding the flock size by 11% in the nine months following the epidemic. Broiler chickens were much less affected by the disease, and producers added 3 million broiler hens to increase the flock size by 6%. 

Processors saw little overall impact on broiler profit margins during the last major HPAI outbreak, as rising prices for domestic chicken cuts were largely offset by declining prices for exports, according to Gro’s Broiler Chicken Margin Monitor. Margins, which were already running high, ranged between 17 and 21 cents per pound for the length of the outbreak, about double the 10-year historical average. 

Broiler chicken margins today are at 12 cents a pound, compared with the 9-cent average of the past 10 years. Gro’s Broiler Chicken Margin Monitor is a new application that offers a comprehensive view of industry profitability and the likelihood of future changes in broiler chicken price and supply. 

Some foreign bans of US poultry have already been instituted in response to this year’s HPAI outbreak, including by China, Mexico, and Japan. However, such bans on US chicken exports are typically county and state specific, rather than national. Unless the US becomes overrun with the virus, foreign bans may exert only localized impacts on prices. 

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