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Golden Egg: Will Egg Prices Go Further Up?
Chicken eggs
The price of grains and oilseeds, the principal components for the production of mixed feeds, continues its growth these days. In recent weeks, together with prices in the export market, the domestic prices for feed wheat have reached 9 thou. UAH/t (+450 UAH/t), corn has risen to 8.55 thou. UAH/t (+350 UAH/t), and sunflower cake and meal to 10.7 thou. UAH/t (+200 UAH/t) and 11.5 thou. (+300 UAH/t), respectively.
Since the start of new crop grain processing, the price for mixed feed for laying hens has increased by 60%, and the producers have already put 12.2 thou. UAH/t in February. Of course, this will trigger the upward trend in egg prices, as mixed feed accounts for up to 75% of the production cost.
The market experts expect the upward trend in the price of grains and oilseeds to persist for another 2-3 months. Therefore, one should not expect a decline, at least during this period. No deficit of grain raw materials for feed producers is anticipated. The total domestic market demand, including from feed production, is 6-7 mln t of corn, and it will be fully met, taking into account the volume of the new crop and the carryovers from last season.
In the meantime, the poultry farms of Avangard agroholding cannot actively attract investments and expand egg exports, which could have contributed to additional income for our company and stabilized egg prices in the domestic market.
However, the economic conditions do not work in this case, as the enormous and senseless pressure on our business by the NABU law enforcers has completely discouraged potential investors and limited our access to any credit resources. Under these conditions, we were forced to stop opening new trade representative offices abroad, and of the existing eight (Singapore, Hong Kong, Malaysia, Iraq, UAE, Liberia, Qatar, Bahrain), six have suspended operations.
Our company's export performance in 2020 plunged by 30% YoY. Combined with the closure of eight poultry farms, which unfortunately will not be the last, and the consequent reduction in production, the supply of eggs on the domestic market will fall as well. Thereby, we have a direct dependence between the long-lasting arbitrariness of the NABU, the lack of proper state support and direct losses for our company, which produces such an important consumer product as chicken eggs.
Yuri Kravchenko, Advisor to the Chairman of Avangard Supervisory Board
