Supply shortages brought on by the North American highly pathogenic avian influenza (HPAI) outbreak has impacted the price both shell eggs and liquid egg products, but the impact has not been quite as harsh on the shell egg markets.
Because of that, the demand for liquid eggs appears to be rising, said Jeff Zadoks, chief operating officer (COO) of Post Holdings.
Post Holdings, the parent company of leading liquid egg producer Michael Foods, on February 7 held an earnings call for its first quarter of fiscal year 2025, and during that call, Zadoks discussed ways in which HPAI is affecting business.
Zadoks said in the current environment, liquid egg prices are much higher than they normally would be, “but not quite as inflated as shell eggs.”
And egg purchasers are noticing that trend, he said, which ultimately could be good for Post Holdings and Michael Foods.
“It brings to the forefront in our customers’ or potential customers’ minds the fact that they could go to liquid at a lower price than shell eggs, and those folks that can convert easily are trying to do that now,” he said.
“Unfortunately, there’s not enough supply available to meet all the customer demand that we’re seeing for liquid egg, but as our supply comes back, that’s something that we could take advantage of in the short term and hopefully in the medium to long term to continue to add to our volume.”
HPAI’s impact on Post Holdings during Q1
Two of Post Holdings’ business units include the sale of egg products: Foodservice and Refrigerated Retail.
The Foodservice segment profit was $86.1 million for the quarter, a year-over-year increase of 13.7%, while the Refrigerated Retail segment profit was $24.2 million, a decrease of 32.0%.
Zadoks said the quarter ended on a challenging note with two of the company’s third-party contracted farms being hit by HPAI in December 2024, but the impact of those flock infections did not have a material impact on the results of the first quarter, which ended on December 31, 2024.
However, he added that impacts will likely be felt more during the second quarter.
“Our supply imbalance will cause sourcing and cost challenges, especially in our fiscal Q2. We have successfully priced through each avian influenza outbreak in the past, and while the magnitude of current market prices and volatility are unprecedented, we are confident our ability to navigate through the current landscape. We estimate the cost before pricing impact on our fiscal second quarter will be a headwind in the range of $30-50 million when compared to the fiscal first quarter results,” he said.
“Given the volatility in egg market prices, the actual result could vary, perhaps significantly from this range.”
Zadoks noted that his outlook is based on the assumption that Michael Foods recovers its lost egg supply as planned and no further instances of HPAI occur at company-controlled farms.
View our continuing coverage of the global avian influenza situation.
To learn more about HPAI cases in commercial poultry flocks in the United States, Mexico and Canada, see an interactive map on WATTPoultry.com.
