Recent extreme weather events have caused frequent disruptions, with Typhoon Maysak's passage leading to widespread flooding in Guangxi, impacting hog production capacity to some extent. However, from an egg perspective, Guangxi's egg output is relatively limited. According to data disclosed by the Guangxi Zhuang Autonomous Region Statistics Bureau, Guangxi's poultry egg production in 2025 was 554,000 tons, representing a relatively small proportion. The areas most affected by the current Typhoon Bavi are Jiangsu, Zhejiang, and Fujian. In 2025, Zhejiang's egg production was 362,000 tons, and Fujian's poultry egg production was 762,000 tons, both constituting a relatively limited share. Moreover, the damage caused by Typhoon Bavi currently appears less severe than the flooding brought by Maysak. Therefore, an overall assessment suggests that recent extreme weather has had a minor impact on the egg supply side. Extreme weather does affect demand rhythm to some extent, stimulating short-term stockpiling demand among consumers, but the persistence of this demand effect is poor.
The primary impact of recent weather on eggs lies in the decline in laying rates under high-temperature conditions. This effect is mainly seasonal. However, against the backdrop of a tight layer flock, it still contributes to the recent price increase.
Short-Term Spot Market Remains Tight
The main reason for the current round of egg price increases is the phase of tightness in the laying hen inventory, compounded by the decline in laying rates due to high temperatures. Additionally, the low inventory levels within the industry have further amplified price elasticity. The issue of tight spot supply in the layer industry currently lacks an immediate solution and can only be addressed by price increases suppressing demand. The factor contributing most significantly to the price margin in this round is the drop in laying rates. Based on seasonal patterns, the laying rate still has room to decline further, which further supports the strong trend in short-term spot prices. There is potential for egg spot prices to break previous highs within the next month.
Medium to Long-Term Capacity Will Continue to Recover
From a medium to long-term perspective, future production capacity will continue to recover. The low point in the laying hen inventory from May this year has most likely been seen, and capacity will gradually recover in the later period. After September, as the weather cools, layer production performance will significantly improve, and spot prices will gradually decline. The stronger-than-expected rise in egg prices during the second quarter of this year prompted many farmers to replenish chicks on a large scale. Data shows that the volume of chick placements in Q2 this year was the highest since 2020. Furthermore, during this price increase cycle, the price structure for eggs has shown significant divergence, indicating signs of an increase in the inventory of newly started laying hens.
Conclusion
Currently, the main contract is undergoing a rollover, with funds moving from the JD2608 contract to the JD2609 contract. Given the continued tightness in short-term spot supply with no immediate resolution in sight, the JD2609 contract still has a basis for strength. From a medium to long-term view, the recovery in inventory has begun to show initial signs in the supply of small-sized eggs. The room for the JD2701 contract to follow spot prices further upward is gradually becoming limited. Spot prices in the fourth quarter are expected to trend downward, presenting an opportunity to consider a long JD2609/short JD2701 spread trade. For breeding enterprises, the current futures term structure is relatively the most suitable for hedging. Hedging under a backwardation structure allows for generally smooth physical sales while capturing a positive basis, presenting hedging opportunities worth monitoring.
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