If you have been to the dairy counter in your local supermarket you probably were shocked to see the price of a dozen eggs. For the most recent period ending in August prices rose 65% to $2.24 up from $1.35 the year before. Unfortunately, past egg prices like stock prices do not provide a window on future price trends. What caused this increase in price? Shell egg farmers are putting the blame on an outbreak of Avian Influenza in the upper Midwestern United States. Over 40 million laying hens and pullets were affected. Resulting in a 13% reduction in the national laying flock. In calendar year 2014, the U.S. produced about 86 billion eggs, equaling ten percent on the world egg supply. In FY 2015 the company's share of the U.S fresh shell egg market was 23%. At this point in time investors should be asking if Avian Influenza will occur again or if it was a onetime event. The odds of a repeat of an event of this magnitude are less than one in five in my opinion.
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