Egg prices set to rise seasonally on tightening supply and firming demand

Since July 2026, China's national egg market has rebounded swiftly after a deep correction in late June, entering a clear upward trajectory.

According to Mysteel's assessment, during the week of July 2, the average egg prices in major producing regions reached Yuan 4.33/jin, up 5.61% month-on-month and 66.54% year-on-year; major sales regions averaged Yuan 4.40/jin, rising 6.80% month-on-month and 65.41% year-on-year. Into the second week of July (as of July 9), prices continued to climb, with the weekly average price in producing regions hitting Yuan 4.46/jin, a rebound of Yuan 0.46/jin, or 11.5%, from the prior low during the plum rain season. Overall market sentiment remains strongly bullish, backed by solid fundamentals.

The magnitude of this rally has exceeded market expectations, driven primarily by a supply-demand resonance.

On the supply side, the laying rates have been declining due to extreme heat. As much of the country enters the "sanfu" summer heat period, persistent temperatures above 35°C have triggered heat stress in laying hens, reducing chicken's feed intake and hindering follicle development. According to Mysteel's Data, the national laying rate fell to 90.06% as of July 9 and continues to trend downward. The resultant daily output contraction has kept fresh egg supply persistently tight, serving as the most direct driver of the July spot price rebound.

In addition, limited new laying hens have added to the supply tightness. As of June 30, 2026, the national laying hens inventory stood at 1.273 billion, down 1.32% month-on-month. Farmers showed relatively low replenishment enthusiasm from Q4 2025 through Q1 2026, meaning that new layers have yet to come online in significant numbers. Although chicks purchased around March 2026 are gradually entering production, they have not yet formed an effective incremental supply.

Lastly, the inventories have been at critically low levels. According to a July 8 survey by Mysteel covering 10 regions and 31 egg production-area markets, production-end egg inventory stood at 0.69 day, while traders' spot inventory was 0.95 day, leaving virtually no buffer stock. End-market buyers rely almost entirely on daily output, which sells out immediately upon availability, underscoring a pronounced supply–demand mismatch. 

In this case, the farmers have grown increasingly reluctant to sell and more inclined to raise offers with production enterprises' inventories at rock-bottom levels, further tightening spot availability.

On the demand side, trading conditions have improved markedly recently, driven by multiple supportive factors.

First, as the southern China regions exit the rainy season, egg storage conditions have improved significantly, reversing earlier issues of short shelf life and high spoilage. Traders' confidence has recovered, spurring concentrated egg restocking and noticeably stronger terminal purchasing.

In addition, with production-end and traders' inventories declining, mid and downstream participants view current prices as having hit their pre-Mid-Autumn Festival low, increasing their willingness to build stocks.

Food processing enterprises and cold-storage traders have also begun preparing for the Q3 peak season, accelerating market turnover.

However, Mysteel's data shows that egg sales volume in five representative sales regions fell to 5,781.65 tonnes in the week ending July 10, down 8.43% week-on-week and 2.54% year-on-year, as school holidays reduced group-purchase demand and food factories turned cautious after price hikes. Only supermarket just-in-time purchases provided support, indicating that end-consumer demand remains in the off-season and the peak season has yet to arrive.

Looking through mid-to-late July, critically low production-end inventories and steady restocking in southern China after the removal of the plum rain season's bearish weight, should leave room for further upside in egg prices. With mid and downstream stocks already lean, any price pullback is likely to draw buying interest from food processors and cold-storage operators, limiting downside risk. Still, the traditional off-season continues to temper gains, as terminal demand has not yet fully recovered. Near-term egg prices are expected to rise with intermittent pullbacks.

As the market moves from late July into August, the market will transition into its traditional peak season, driven by the gradual inventory build-up around Mid-Autumn Festival. With stocking activity expected to peak in late August, the combination of rising demand and constrained supply, as summer heat continues to weigh on laying rates, is likely to trigger a fresh round of price increases.

Nevertheless, the main uncertainty ahead lies in layer culling. At present, culling volumes are exceptionally low, as farmers, supported by healthy margins and bullish expectations for the Mid-Autumn Festival, are widely choosing to delay culling. While culling hen prices have continued to climb, slaughterhouses are constrained by high costs and have limited capacity to raise purchase volumes of culling hen, meaning culling is unlikely to pick up materially in the near term.

The scale of pre-festival culling will be a key determinant of the holiday price peak. If farmers collectively postpone culling until closer to the Mid-Autumn Festival, the interaction between delayed elimination and fresh supply from newly matured layers will ultimately set the price direction. At the same time, market participants should keep an eye on the pace at which new capacity is released. Chicks purchased around March were at record-high replenishment levels, and as these birds enter peak production, their output will add supplementary supply to the market.