Egg Prices Sizzle as Salmonella Recall Grows

The price of your morning omelet will likely rise within the next two weeks, following the massive recall of 550 million eggs linked to salmonella.

Since the Aug. 13 recall two weeks ago, wholesale egg prices in the Northeast and Midwest, for example, have soared nearly 40%, according to the U.S. Department of Agriculture.

"When the wholesale market goes up by 50%, the retailers have to pass it along," said Len Steiner, a principal with food industry consultant Steiner Consulting. "They'll probably pass the increase along next week or the week after that."

Ouch.

An About-Face for Egg Prices

The expected leap comes after consumers have enjoyed five consecutive months of falling retail egg prices, which have dropped from an average of $1.87 for a dozen large Grade-A eggs in February to $1.44 in July, according to the U.S. Bureau of Labor Statistics' Consumer Price Index report.

On top of that, the average price of store-bought eggs hasn't hit north of $2 for the past two years. But that will likely change soon. Wholesale prices are expected to rise between $1.05 to $1.45 per dozen this week alone, and that's before factoring in the additional markups at the stores.

Before rushing out to snap up eggs today, consumers may want to cool their heels, Steiner said. Grocery outlets can't turn on a dime to change prices, nor do they want to create yo-yo pricing that could confuse and irritate customers, so any price hike likely won't take affect until next week, or possibly the following week, he said.

Good News for Organic Eggs

The higher wholesale egg prices bode well for organic egg producers, whose products tend to cost more. The organic egg market is already benefiting from the recall's fear factor, as well as a level pricing field.

The climbing egg prices come not only from the Wright County Egg and Hillandale Farms recall of a total of 550 million eggs, which has reduced the supply, but also from a seasonal rise in demand as school starts and parents increase their efforts to serve up a hot morning meal.

Indeed, the rising wholesale prices suggest that the recall hasn't put a damper on egg demand, because prices would likely have remained soft if demand had dropped.

Maybe that's why the American Egg Board calls it the incredible, edible egg...