Had egg industry faced such oversupply problem before? If yes, what happened after oversupply

Yes. The egg industry is highly cyclical and operates on a classic boom-and-bust agricultural model. It is a well-documented historical pattern that extreme price peaks almost inevitably lead to massive oversupply crashes roughly one to two years later.

When prices are high, producers expand their flocks to capture profits. However, because millions of hens mature and start laying simultaneously, the market becomes flooded with eggs just as consumer demand normalizes.

The Historical Precedent: The 2015–2017 Cycle

The closest historical parallel to the 2026 crash occurred a decade ago in the United States, following a nearly identical trajectory:

• The Crisis (2015): A devastating outbreak of Highly Pathogenic Avian Influenza (HPAI) wiped out over 50 million birds. This severe supply shock sent egg prices soaring to decade highs, much like the peaks seen in 2024 and 2025.
• The Overcorrection (2016): Enticed by record margins and aiming to hedge against future outbreaks, farmers aggressively rebuilt and expanded their layer flocks.
• The Crash (2017): By 2017, the newly expanded flocks were producing at maximum capacity. Supply vastly outpaced demand, creating a severe glut. Wholesale prices plummeted to their lowest levels in a decade, wiping out profits across the sector.

What Happens After an Oversupply?

Because the egg market is constrained by biological timelines—hens live and lay for a year or more—correcting an oversupply cannot happen overnight. Historically, the aftermath of an egg glut involves a painful, multi-step market correction:

1. Margin Squeezes and Farm Closures During an oversupply, wholesale prices frequently fall well below the break-even cost of production (feed, labor, and transport). Small, independent farmers who lack the cash reserves to survive prolonged periods of negative cash flow are often forced out of business. This environment typically accelerates industry consolidation, as larger commodity giants acquire failing smaller operations.

2. Supply Chain Contraction To stop the financial bleeding, producers must actively shrink the overall size of the commercial flock. They execute this through two primary levers:

• Early Culling: Farmers will slaughter older flocks earlier than usual, rather than keeping them through a second, less productive laying cycle.
• Reducing "Egg Sets": Hatcheries will drastically reduce the number of eggs placed in incubators to hatch new pullets (young hens), slowly choking off the pipeline of replacement birds.

3. Promotional Retail Pricing To prevent massive amounts of inventory from spoiling, egg producers are forced to offer steep wholesale discounts to grocery chains. Consumers see this as heavy retail promotions and sales. While this helps clear the immediate backlog, it temporarily trains shoppers to expect cheap eggs, making it difficult for premium brands to regain pricing power.

4. Eventual Market Stabilization It generally takes 12 to 18 months for reduced hatchings and early culling to meaningfully shrink the national flock back down to a sustainable size. Following the 2017 crash, supply finally realigned with consumer demand by late 2018, allowing prices to slowly creep back up to a stable, profitable equilibrium.