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Cal-Maine results reveal pressure on US egg sector

EGG PRODUCERS in the US are struggling with oversupply, the prospect of more volatile feed prices and a move from caged systems to more extensive alternatives.

The national flock hit a near-record high of 341.5 million hens in April this year, though they have dropped slightly since then. Productivity, too, is up 2% to 77.9 eggs per 100 hens.

And the hatch rate has continued to rise, suggesting further supply pressure in 2019.

All this has led to lower prices. Between March and May, the price for conventional eggs in the south-east dropped 52%, compared with the same period last year.

It translated to a near $20m loss for US egg giant Cal-Main in its fourth quarter covering the 13 weeks to 1 June, with net sales down 36.7% to $280m.

 The firm remained profitable for its full-year figures: sales were $1.3bn, compared with $1.5bn the year before and net income was $54.2m.

Dolph Baker, chairman and CEO said the “disappointing” results in the fourth quarter represented the more challenging market conditions.

The company is diversifying from conventional cage eggs into cagefree alternatives. New facilities in Utah, Texas and Florida will add six million birds to the company’s cage-free flock.

Late last year California banned the sale or production of caged eggs by 2022, and other states have passed similar legislation.

And feed, too, was a cause for concern. Mr Baker said the company expected price volatility in the coming months as, despite grain exports being down, poor weather had hampered crop progress.


“We will focus on what we can control and manage our business for the long term in spite of the current challenges facing our industry.

“We have a strong balance sheet that provides the financial flexibility to support our growth strategy, and we look forward to the opportunities ahead for Cal-Maine Foods in fiscal 2020.”