China egg prices rally in Aug driven by supply contraction and seasonal demand recovery

While the price rally expectations failed in July 2026, China's domestic egg prices underwent a swift rebound after a round of rapid declines entering August. Before staging a recovery, the average price in major production regions fell to Yuan 4.35/jin. The key question now is whether this rebound is merely a short-term oversold correction or a signal that the much-anticipated peak-season rally is finally about to materialize.

Looking back on July, the egg market saw intensifying long-short contention. High temperatures reducing egg production and low laying hen capacity supported expectations for egg price increases. However, the prices showed repeated oscillations due to delayed culling of older hens, newly laying hens coming into production adding to supply, and the fact that peak seasonal demand had not yet kicked in. The anticipated rally failed to materialize, and market confidence was significantly dampened.

Currently, during the dog days of summer, the average laying rate of hens has declined to around 90%, resulting in a phased contraction of daily egg output. Meanwhile, older hens that were previously retained are now facing concentrated culling, with elimination volumes steadily increasing. Both factors have provided underlying support for egg prices.

However, chick sales saw notable month-on-month increases from April to June 2026, meaning the number of newly laying hens will continue to grow. This incremental supply partially offsets the above bullish impact. Nevertheless, considering that newly laying hens are still in the early stage of production and have yet to reach peak output, new laying hen capacity is unlikely to be released in a concentrated manner. Therefore, supply-side pressure has not become pronounced.

More importantly, demand is the core factor determining both the timing and the magnitude of this round of egg price rally. Based on seasonal patterns, August traditionally marks the onset of the peak demand season for eggs.

In early August, demand has remained constrained by high temperatures, with procurement largely driven by restocking based on market sentiment. By mid-August, food processing enterprises will begin concentrated production, steadily releasing deep-processing demand for eggs. At the same time, high temperatures are expected to gradually ease, supporting an improvement in end-user demand.

In late August, schools across the country will reopen, triggering cafeteria procurement. The convergence of these demand drivers will become the core support for this round of price increases.

Taking into account supply-demand dynamics and market sentiment, egg prices in early August have maintained a mildly bullish trend, lacking the conditions for a significant rally. Prices have been rising in a tentative, test-driven manner, with support at Yuan 4.40-4.50/jin in major production regions and the price center stabilizing at Yuan 4.50–4.60/jin.

From mid-to-late August, the prices are expected to shift higher, with the mainstream price range likely rising to Yuan 4.70-4.90/jin, and the monthly high potentially touching Yuan 4.90-5.00/jin by month-end. However, the influx of newly laying hens will limit the upside, making the upward trajectory relatively moderate.

Overall, the expected rally in egg prices is gradually coming to fruition. Key factors to monitor going forward include the pace of older hen culling, the production schedules of food processing enterprises, and the release rhythm of cold storage and trader inventories held in batches.