Egg Prices Surge to Records as Bird Flu Decimates Poultry Flocks

For supermarkets, eggs are a staple product that most consumers pick up on trips to the grocery store, similar to milk and butter. To maintain store traffic, grocers said they have been sacrificing some profits on eggs to keep prices for consumers competitive. Some suppliers are projecting potential relief in price by February or March, but cold weather could hamper production in the near term, executives said.

“We are trying to keep eggs relatively accessible,” said

Dan O’Neill,

director of center store and perishables at Angelo Caputo’s Fresh Markets, a chain of eight stores in Illinois.

Angelo Caputo’s bought extra-large eggs for $5.09 a dozen recently, up from $1.30 at the start of the year, Mr. O’Neill said. The grocer has for months been selling eggs for slightly above cost, he said, as wholesale prices have increased.

Grocery prices have continued to increase this year because of what companies have said are higher costs of labor, ingredients and logistics, helping supermarkets generate higher sales and profits. Those factors have propelled egg prices, too. As eggs get more costly, some supermarkets are selling more organic eggs that are sometimes less expensive than conventional varieties, while suppliers say consumer demand has remained steady despite higher prices.

Cases of highly pathogenic avian influenza have so far this year led to the deaths of about 58 million birds, the deadliest outbreak in U.S. history, according to Agriculture Department data. Entire poultry flocks are destroyed after an infection is confirmed, to help limit the outbreak’s spread.

More than 40 million egg-laying chickens have died in the current outbreak, according to USDA data, with the total supply of egg-laying chickens falling more than 5%—to about 308 million—from the start of January to December.

Despite a tight egg supply and high prices, shortages are still a long way off, said

Emily Metz,

chief executive of the American Egg Board, which represents egg producers. Egg supplies have been more stable this year compared with the previous major U.S. avian-influenza outbreak, in 2015, she said, as the time it takes for farms to recover from an outbreak has shrunk to roughly three months from six to nine months.

The current outbreak has largely been attributed to wild birds spreading the virus to farms as they migrate across the country, agriculture-industry officials have said. While the 2015 outbreak ended in June, cases this year continued to pop up throughout the fall.

Food-industry officials said they fear the current outbreak could continue. “There’s definitely a lot of cause for concern,” said

Karyn Rispoli,

who determines egg pricing at Urner Barry.

Wholesale egg prices have been rising for nine consecutive weeks, according to Urner Barry. Strong demand has driven prices higher in recent months as people bake more and eat warmer breakfasts during cooler weather, Ms. Rispoli said, though some consumers are starting to buy less.

Steve Schwartz,

director of sales and marketing at Morton Williams Supermarkets in New York, said: “Every week you get an egg quote, it’s more and more.”

There aren’t many substitutes for eggs, grocery executives said. Specialty eggs, such as organic eggs that are sold to retailers and distributors on a fixed-price basis, can be about $1 cheaper a dozen, but there are only so many available brands of eggs for operators to secure, they said.

“Some of those replacement products are just as rare or expensive,” said

Max Bowman,

chief financial officer of the largest U.S. egg producer,

Cal-Maine Foods Inc.,

at a November investor conference.

KeHE Distributors has been trying to secure a wider variety of egg brands, as well as plant-based egg alternatives, said

Jennifer Onoja,

a senior category manager of dairy, nondairy and refrigerated beverages at the grocery distributor. Eggs cost the company 20% to 50% more this year.

“These are essential categories that are staples in your refrigerator,” she said.

After the major outbreak in 2015, the USDA upgraded its virus testing and detection systems, training and equipment, officials have said. Some farmers invested in new biosecurity systems for their barns meant to disinfect anyone who walks into the tightly sealed poultry houses. Despite the changes, farmers and USDA officials have struggled to halt this year’s outbreak.

“All signs are pointing to that this will be something the industry has to deal with,” said Ms. Metz of the American Egg Board. “We continue to manage it and improve in how we manage it.”

Write to Jaewon Kang at jaewon.kang@wsj.com and Patrick Thomas at patrick.thomas@wsj.com

For supermarkets, eggs are a staple product that most consumers pick up on trips to the grocery store, similar to milk and butter. To maintain store traffic, grocers said they have been sacrificing some profits on eggs to keep prices for consumers competitive. Some suppliers are projecting potential relief in price by February or March, but cold weather could hamper production in the near term, executives said.

“We are trying to keep eggs relatively accessible,” said

Dan O’Neill,

director of center store and perishables at Angelo Caputo’s Fresh Markets, a chain of eight stores in Illinois.

Angelo Caputo’s bought extra-large eggs for $5.09 a dozen recently, up from $1.30 at the start of the year, Mr. O’Neill said. The grocer has for months been selling eggs for slightly above cost, he said, as wholesale prices have increased.

Grocery prices have continued to increase this year because of what companies have said are higher costs of labor, ingredients and logistics, helping supermarkets generate higher sales and profits. Those factors have propelled egg prices, too. As eggs get more costly, some supermarkets are selling more organic eggs that are sometimes less expensive than conventional varieties, while suppliers say consumer demand has remained steady despite higher prices.

Cases of highly pathogenic avian influenza have so far this year led to the deaths of about 58 million birds, the deadliest outbreak in U.S. history, according to Agriculture Department data. Entire poultry flocks are destroyed after an infection is confirmed, to help limit the outbreak’s spread.

More than 40 million egg-laying chickens have died in the current outbreak, according to USDA data, with the total supply of egg-laying chickens falling more than 5%—to about 308 million—from the start of January to December.

Despite a tight egg supply and high prices, shortages are still a long way off, said

Emily Metz,

chief executive of the American Egg Board, which represents egg producers. Egg supplies have been more stable this year compared with the previous major U.S. avian-influenza outbreak, in 2015, she said, as the time it takes for farms to recover from an outbreak has shrunk to roughly three months from six to nine months.

The current outbreak has largely been attributed to wild birds spreading the virus to farms as they migrate across the country, agriculture-industry officials have said. While the 2015 outbreak ended in June, cases this year continued to pop up throughout the fall.

Food-industry officials said they fear the current outbreak could continue. “There’s definitely a lot of cause for concern,” said

Karyn Rispoli,

who determines egg pricing at Urner Barry.

Wholesale egg prices have been rising for nine consecutive weeks, according to Urner Barry. Strong demand has driven prices higher in recent months as people bake more and eat warmer breakfasts during cooler weather, Ms. Rispoli said, though some consumers are starting to buy less.

Steve Schwartz,

director of sales and marketing at Morton Williams Supermarkets in New York, said: “Every week you get an egg quote, it’s more and more.”

There aren’t many substitutes for eggs, grocery executives said. Specialty eggs, such as organic eggs that are sold to retailers and distributors on a fixed-price basis, can be about $1 cheaper a dozen, but there are only so many available brands of eggs for operators to secure, they said.

“Some of those replacement products are just as rare or expensive,” said

Max Bowman,

chief financial officer of the largest U.S. egg producer,

Cal-Maine Foods Inc.,

at a November investor conference.

KeHE Distributors has been trying to secure a wider variety of egg brands, as well as plant-based egg alternatives, said

Jennifer Onoja,

a senior category manager of dairy, nondairy and refrigerated beverages at the grocery distributor. Eggs cost the company 20% to 50% more this year.

“These are essential categories that are staples in your refrigerator,” she said.

After the major outbreak in 2015, the USDA upgraded its virus testing and detection systems, training and equipment, officials have said. Some farmers invested in new biosecurity systems for their barns meant to disinfect anyone who walks into the tightly sealed poultry houses. Despite the changes, farmers and USDA officials have struggled to halt this year’s outbreak.

“All signs are pointing to that this will be something the industry has to deal with,” said Ms. Metz of the American Egg Board. “We continue to manage it and improve in how we manage it.”

Write to Jaewon Kang at jaewon.kang@wsj.com and Patrick Thomas at patrick.thomas@wsj.com