Tightness in US egg supplies which has driven prices to record highs will not be resolved for now, the country’s biggest producer said, noting the continued impact of the bird flu culls behind the squeeze.
Although there has not since June been a finding of bird flu, or HPAI, in a commercial table egg-laying flock, “outbreaks may recur,” said Cal-Maine Foods, the world’s top egg group, based in Mississippi.
Last week, the disease was found in two backyard flocks in Oregon, as well as on a 15,500-bird commercial turkey farm in Utah, according to the US Department of Agriculture.
Even if no further infected table egg pullets are found, egg “supply is expected to be lower until the flocks are repopulated”, Cal-Maine said.
Since February, some 30.7m commercial table egg-laying hens, equivalent to 9.5% of the domestic flock, have been “depopulated” thanks to the HPAI outbreak, the group said, quoting official data.
Eggs in incubators as of the start of last month were 4.3% down year on year, implying constraints to the drive to rebuild the flock, which shrank by 5.8%, or more than 18m birds, in the year to June 1.
‘Prices climbed sharply’
The dip in US table egg production, which the USDA forecasts falling by 3.0% to 7.75bn dozen for 2022, has spurred a rise in the wholesale price of large Grade A eggs in the benchmark New York market to a record 325 per dozen as of July 11 – more than three times the average value for that date.
“Daily prices trended down at the beginning of June but climbed sharply for the rest of the month,” the USDA said last week, reporting that the price rise had “continued undeterred” in early July.
The price gains could in part be explained by “relative insensitivity of egg demand to price changes” spurred by the supply squeeze, the USDA said, noting too that “eggs remain a relatively cheap source of protein compared to chicken, beef, and pork”.
Nonetheless, the USDA is forecasting a dip ahead in prices, which it sees averaging 235 cents per dozen for the July-to-September quarter, and 185 cents per pound for the October-to-December period.
US exports of shell eggs and egg products plunged by 60% last month to 41.1m dozen in egg equivalent terms.
Back in the black
Cal-Maine reported that for the quarter to May 28 it sold eggs at an average of 206.9 cents per dozen, up by 57% year on year.
This eclipsed a rise of 17.7% year on year in costs – driven by “wage increases in response to the tight labour market”, as well as 24% growth in feed bills per dozen eggs – to drive the group to an operating profit of $145.7m for the quarter, compared with a loss of $13.0m a year before.
The group reported earnings of $109.9m, compared with an after-tax loss of $4.24m a year before.
Earnings represented the equivalent to $2.25 per share, ahead of the 1.84-per-share result that investors had expected, according to Refinitiv.
Cal-Maine shares stood 0.8% higher at $52.74 in late morning trading in New York.