Chinese egg futures continued to improve. The prices jumped by more than 4% on China’s Dalian Commodity Exchange on Wednesday.
Early this week, after an extended Lunar New Year break, Chinese commodities markets collapsed. Investors worried the virus outbreak would depress consumption. As a result, several features hit downside limits.
Yuan Song, research director at consultancy China-America Commodity Data Analytics, says that earlier price falls were exaggerated. Now the demand and supply of eggs are not as bearish as expected because the market is correcting. Egg trade is still stagnant in the Hubei region, but in the other areas, it’s recovering. Yuan says that current egg prices are losses for breeders. Even though demand was expected to recover, supply could decrease as farmers find it difficult to maintain stocks of hens.
Coronavirus and Egg Production
The epidemic had a significant impact on eggs. At present, roads and villages are closed in production and sales areas; traffic is not smooth, transportation is blocked. In Hubei province, at the heart of the coronavirus outbreak, some farmers are euthanizing the poultry because new regulations have stifled the transport of feed supply. The pressure on egg shipments has severely restricted consumption and market circulation.
Consumption of agricultural products experienced significant restrains by disruptions to transportation and unnecessary long-distance movements. The ban harmed the entire sector. Eggs and other agricultural products sector are highly dependent on land transportation.
Despite the decline in catering demand, egg production capacity has not decreased as the epidemic progressed. Instead, supply has continued to increase. With demand falling, egg prices in production areas will continue to decline. At the sales and, due to the epidemic situation, there is a certain amount of rush buying and hoarding, the retail end price has risen, and the spot production and sales will diverge. Egg spot fundamentals are generally short, and there is a significant excess of supply in the production area.
The coronavirus epidemic has hit China hard and has now killed 490 people in the country. The virus infected more than 31 000 people. The outbreak has affected trade around the globe as exporters, miners and manufacturers face delays and potential shipment cancellations. The Chinese authorities called for the resumption of commercial operations outside Hubei province in an orderly manner, without neglecting the fight against the outbreak of the new virus. Despite this, lots of Chinese companies declare force majeure. The virus stifles their ability to make deliveries. Lots of international chains stopped operating in China, such as Starbucks, Mcdonalds, Apple, and IKEA.