The US bird flu outbreak, which has cost the lives of 36m laying hens, will continue to squeeze table egg supplies until at least the end of this year, Cal-Maine Foods said, as it unveiled an 84% surge in its egg prices.
The Mississippi-based company, the world’s biggest table egg group, noted that the US industry was attempting to restore its production after losing 35.8m laying hens, and 1.0m pullets, this year to HPAI (highly pathogenic avian influenza) and the flock liquidation aimed at controlling it.
While the total number of layer hens has fallen by 4.6% over the past year to 305.3m, US Department of Agriculture data show, producers had, as of this month, placed 9.0% more eggs in incubators for hatching.
This increase signals “that layer flocks may increase in the future”, Cal-Maine said.
‘Will continue to have an impact’
However, the initiative will take time to translate into revived egg output, the group said, noting a forecast from analysis group Leap Market Analytics that layer hen inventory will not exceed 320m birds for another year.
“HPAI will continue to have an impact on the overall supply of eggs through the balance of the calendar year and possibly beyond,” Cal-Maine said. September has witnessed a marked uptick in US bird flu cases, with the total number of poultry affected leaping to 5.69m, from 610,000 birds in August, and 50,000 in July.
US table egg output in August reached 7.78bn pieces (664.4m dozen), up by more than 80m month on month, but down by 222m from the total a year before.
The USDA forecasts total US table egg output in 2022 shrinking by 2.3% year on year to 7.79bn dozen, before recovering by 5.6% in 2023 to 50m dozen.
The squeeze on supplies has been reflected in soaring prices, which as of Tuesday stood at 413 cents per dozen, as measured by Grade A eggs in New York – more than triple the 120 cents per dozen that they achieved a year before, USDA data show.
For Cal-Maine itself, its average egg sales price in the quarter as ended on August 27 stood at 227.5 cents per dozen, up 84% on the value for the same period of last year.
“Egg prices continued to move higher during the quarter as supply tightened due to the impact of the highly pathogenic avian influenza outbreak,” said Max Bowman, the Cal-Maine Foods chief financial officer.
The group’s revenues more than doubled year on year, to $658.3m.
‘Significant inflationary pressures’
Some of the benefit of the sales rise was eroded by increased costs, with Dolph Baker, the group’s chief executive, noting “significant inflationary pressures” fuelling increases in feed, labour, packaging and distribution bills.
The group said that it “continued to navigate through a tight labour market with higher wages, and incurred higher distribution costs due to the increase in fuel prices”.
Feed costs rose by 23% year on year to $0.567, on a per-dozen-eggs basis, with the company foreseeing “continued corn and soybean upward pricing pressures and further market volatility” well into 2023.
Nonetheless, Cal-Maine reported earnings of $125.1m for the quarter, returning to the black after running up an $18.0m loss a year before.
The earnings figure equated to $2.57 per share, beating the $2.33-per-share number that Wall Street had expected.
Cal-Maine shares stood 0.4% higher at $60.80 in late morning deals in New York.