Livestock Pricing Expectations: A Focus on the Layer and Egg Market

In a recent presentation at the 2025 Agricultural Outlook Forum, USDA Chief Economist Seth Meyer provided an in-depth analysis of the current trends and challenges facing the livestock industry, with particular emphasis on the layer and egg market. This analysis revealed a multifaceted landscape characterized by herd contractions in the cattle sector, shifts in productivity within swine production, and the ongoing struggle of the egg industry to recover from the impacts of Highly Pathogenic Avian Influenza (HPAI).

Beef Market: Shrinking Herd and Strong Demand

Meyer highlighted that the cattle herd has been in a contraction phase for several years. Despite record-high feeder cattle prices, farmers have not yet retained enough calves to reverse this trend. "The cattle herd continues to shrink. My colleagues at NASS produced a report in January suggesting that perhaps record feeder prices would prompt a turnaround, but we are not there yet," Meyer stated.

This decline in domestic supply, coupled with robust consumer demand, has pushed beef prices higher. The current dynamics indicate a tightening market, which may lead to further increases in beef prices if the trend continues.

Pig Market: Rebounding Productivity and Export Growth

In contrast, the swine sector is experiencing a significant rebound in productivity after a period of stagnation. Meyer noted an increase in pigs per litter, a key productivity measure that had declined during and immediately after the COVID-19 pandemic. "The industry has improved its productivity. We have seen that productivity jump, perhaps to trend levels seen before, and possibly even faster than the previous trend," he explained.

Moreover, the industry has benefited from declining feed prices, which have alleviated some cost pressures on producers. The growth in export shares of production further supports the optimistic outlook for the swine market.

Egg Market: The Impact of HPAI on Supply and Prices

The egg industry remains one of the most severely impacted segments of the livestock market, primarily due to the repeated outbreaks of HPAI, which have drastically reduced the layer flock population. Meyer underscored the unique nature of the current crisis, noting that the situation differs significantly from past HPAI events. "In 2015, the industry had the opportunity to quickly rebuild the layer flock. However, the ongoing nature of HPAI has hindered similar recovery efforts this time," he mentioned.

Currently, the U.S. layer flock consists of approximately 291 million birds, which is significantly below the ideal range of 320-325 million. Meyer emphasized the urgency of addressing this issue: "We need an opportunity to reduce egg prices, to minimize the impact of HPAI, and to rebuild those layer flocks."

Consumer Price Implications

The egg market is characterized by inelastic demand, meaning that consumers have limited alternatives when egg prices rise. As Meyer pointed out, "While consumers may not be pleased with the price of eggs, there are few substitutes available." This lack of alternatives exacerbates the impact of supply disruptions, making price volatility a pressing concern for both consumers and producers.

Recent losses in the layer flock have prolonged the period of elevated egg prices. "Since the February forecast, we have lost another 7.4 million layer birds. We can expect to add back around four to six million into the flock," Meyer explained. However, these figures indicate that recovery efforts are lagging behind losses, suggesting that price relief may take longer than anticipated.

Looking ahead, Meyer acknowledged the inherent difficulty in forecasting the egg market due to the unpredictability of HPAI. The USDA’s quarterly egg price estimates are based on the assumption of no future outbreaks, a premise that remains uncertain. "The challenge lies in determining what assumptions to make regarding depopulations," he stated, highlighting the complexity of long-term projections in the current environment.

Despite the challenges faced by the egg market, Meyer noted broader trends in food price inflation. While overall food price increases have moderated, egg prices continue to be a significant driver of inflation. "The box of eggs is essentially half full," he noted, reflecting the ongoing struggles within the sector. On the dairy side, he indicated that milk prices are expected to remain flat over the next year, while recent declines in product prices may provide a boost to the export market.

Meyer suggested that the dairy market may become more competitive, with domestic profitability potentially improving as feed ratios stabilize alongside flat prices. This observation indicates a nuanced outlook for different segments of the livestock industry.

Conclusion

Meyer’s 2025 livestock outlook presents a complex picture for the industry. While sectors like swine show signs of recovery, others, such as cattle and the egg markets, continue to grapple with supply constraints and price pressures. The egg market, in particular, faces ongoing disruptions due to HPAI, complicating efforts to achieve price relief. Moving forward, market dynamics and effective disease management will be critical in shaping the trajectory of U.S. livestock production in the coming year. The interplay between supply and demand, coupled with external factors such as disease outbreaks, will continue to influence pricing expectations and the overall health of the livestock industry.