As Americans prepare their holiday treats, they face an unexpected expense: eggs, now costing up to $4.16 per dozen—a staggering 90% increase since the start of the year. While seasonal price surges aren’t new, there is a twist this time: a legal betting market that lets Americans wager on whether egg prices will fall when President-elect Donald Trump returns to the White House.
A new eggministration
Trump and his running mate, Vice President-elect J.D. Vance, both pointed at egg prices during the 2024 election, framing them as part of a broader critique of inflation and the economic policies of the Biden administration.
In September, Trump shared an infographic on Truth Social claiming the price of eggs had risen from $1.99 during his first term to $4.99 under Vice President Kamala Harris.
Vance echoed a similar message on the campaign trail. “Eggs, when Kamala Harris took office, were short of $1.50 a dozen. Now a dozen eggs will cost you around $4,” Vance said at a grocery store in Pennsylvania.
So, what kind of impact, if one at all, will the new administration have on egg prices?
Traders on the prediction market platform Kalshi are not confident that Trump will fight eggflation in his first month, as the market forecasts a 46% chance of egg prices rising in February.
As of Nov. 24, 2024, Kalshi’s market has generated $21,000 in trading volume, a small sum with relatively low liquidity — for comparison, users have wagered more than $750K on who will be Trump’s Agriculture secretary.
On Manifold Markets, a social prediction platform that uses fake money, the same forecast is up to 58%.
And Polymarket, a decentralized prediction market whose CEO’s apartment was recently raided by the FBI, projects a 51% chance of rising egg prices in Trump’s first month.
The truth is that egg prices are highly volatile and historically impacted by various factors beyond government policies.
Hens down
If you’re betting on the price of eggs during Trump’s first month, what happens in January is as important as what happens in February. More important than the incoming administration and its policies is the status of the current record-breaking avian flu outbreak.
While it’s not the first time egg prices have soared ahead of the holidays, there is more at play than increased demand from holiday cooking: the bird flu has wiped out millions of egg-laying hens, depleting egg production from the nation’s farmers and driving up prices at grocery stores.
Of course, avian influenza outbreaks aren’t new, but this year has been especially severe due to changing migration patterns amongst wild birds such as ducks and geese, spreading the infection outside of its usual concentration in the Midwest.
There might not be a quick policy solution, but additional egg-centric prediction markets could provide relief.
Egg futures
Taken to its logical extreme, prediction markets can allow consumers and businesses to hedge against surging and potentially disruptive egg prices.
For example, if Kalshi had a monthly market for egg prices, a restaurant owner who otherwise finds it difficult to react to sudden cost increases could purchase prediction market contracts that pay out if the price of eggs rises above a certain threshold. This would provide a way to easily offset some of its costs and stabilize its profits even in a volatile environment.
Consumers could do the same thing; when egg prices spike, the financial gains from these contracts can help balance out higher grocery bills.
For now, most Americans will bake their pies and whisk their eggnog under the shadow of rising prices. Perhaps soon, they’ll have more ways to hedge their eggs.
