No Eggs

Are we surprised of the egg shortage? Increase in prices? I was not. I highlighted the situation before Covid-19 and MCO. And I wrote about it again during the MCO. Let me explain. During MCO there was an earlier misunderstanding regarding logistics for the agriculture industry. They allowed certain industries to proceed but not others, for example while they allowed farms to proceed, the factories that produces bottles, cartons, packages remained close. Thus, we had ridiculous scenarios where produce did not have proper packaging. There were also situations where lorries and trucks were not allowed to move. These took time to be resolved. I even received phone calls to get these matters resolved. I tried to resolve such matters with a few calls, and it was resolved after a while.

In the meantime, these producers suffered initial losses. Further complicated with shortage of manpower, they suffered further losses. It was made even worse when international logistics ground to a halt. Costs escalated further for fertilisers, pesticides, animal feed and so forth.

With initial losses and lack of manpower, it reduced their ability to cultivate future produce. This squeezed production further. They no longer had the confidence to produce large volumes, thus future productions were further cut. By the time MCO was lifted the volumes produced were far lower than pre-MCO. It has always been my concern on their ability to match pre-MCO productions. With lower production and higher demand, price rose. Higher prices led to lower demand and lower demand led to lower productions. And this downward spiral continues.

This chart came from https://tradingeconomics.com/commodity/corn. This is the price of corn in the last 5 years.

As mentioned in https://www.britannica.com/plant/corn-plant/Uses-and-products it's both used for both humans and livestock. This is putting tremendous pressures on farms and industry. In this page https://corn.org/products/animal-feed-protein/ it just demonstrates the amount of corn used in the livestock industry. Eggs are part of the livestock industry. It's going to take a while longer before prices stabilise.

For many years, Malaysia's Department of Veterinary Services (DVS) and Department of Agriculture (DOA) have been attempting to plant grain corn to supplement the supply to reduce the price pressures that impacts operating costs. As the prices are quoted in US Dollars the pressures further escalate. Unfortunately, Malaysia's terrain is not suitable to plant grain corn. For the peninsula, grain corn competes for space with oil palm. rubber, rice. And for scale it needs to be planted on large areas. Another challenge is the terrain. The terrain is undulating, hilly or rocky thus not suitable to plant grain corn, unlike Thailand, where it is quite flat, and not as wet as Malaysia. In Malaysia sweet corn are planted on small plots rather than grain corn which is more suitable as animal feed.

Another source of animal feed is soybeans. As can be seen here, the price of soybeans almost mirrors the price of corn.

Soybeans and corn are some of the key ingredients in animal feed and with these prices' pressures will continue on livestock productions. So, what can be done? In my discussions, both DVS and DOA have been exploring and experimenting with alternatives to corn and soybean. It's a lot more complicated than that because they need to ensure balanced nutrition to ensure a sustainable production. The little I understand from it is that they look for nutrients that supplies protein and energy; and the livestock industry is satisfied with what soybean and corn can offer.

A little light at the end of the tunnel? It looks like the soybean and corn futures seems to point at lower prices. Therefore, futures contract may promise lower costs. Let's just hope that it corresponds with a weaker US Dollar, or the lower corn and soybean prices may be negated by stronger Dollar.

By now if you are still reading, I would like to thank you or by now your eyes are rolling and you are getting dizzy, I understand perfectly. What I am trying to explain in this long-winded way is that the solution is not that straightforward.

In summary, losses during MCO, squeezed production, price rise, escalating logistics costs, higher prices for corn and soybean, escalating operating costs, intermittent demands impacted the price for poultry and eggs. The war in Ukraine is not helping with the prices and international shipping is just recovering.