Cal-Maine Foods, the world's biggest table egg group, cautioned over a revival
in US egg prices that caught out officials, warning over demand for exports and
food producers, as the group revealed a bigger-than-expected loss.
The Mississippi-based group flagged "solid retail demand" for eggs, and a recovery in US exports,
helping a revival in prices.
Cal-Maine Foods said that the price it had sold eggs for had
risen by 6.8%, to $1.017 per dozen, for its fiscal first quarter, ending
Furthermore, US market prices "have significantly improved since the
end of the quarter and are currently trending well above levels from a year ago",
said Dolph Baker, the Cal-Maine chairman and chief executive.
The comments echo those two weeks ago of the US Department
of Agriculture which, explaining an upgrade to its forecast for domestic egg
values, said that "recent egg prices have been stronger than expected".
"While prices earlier this year were in the range of 2016
prices, recent prices have approached the levels seen in 2013 and 2014," the USDA
With "supply trends at similar levels this year" to last
year, when egg output was boosted by a rebuild in the US laying flock from losses
prompted by a bird flu outbreak, the rebound in prices "may indicate stronger
demand", the USDA said.
'Reduced demand for
However, Mr Baker was cautious over the price gains continuing,
saying that "while overall market conditions are more favourable than a year
ago, we do not expect any sustained improvement in pricing until we have a more
stable supply and demand balance".
He flagged that on exports, while US shipments of shell eggs
"have returned to historical levels since the beginning of calendar 2017", they
are "still below the peak levels reached prior to the avian influenza outbreak".
In the US market, Mr Baker also highlighted "lower
institutional demand for egg products", and weakness in the specialty egg
market, on which Cal-Maine has been shifting its own output, in an effort to
boost its margins and exploit the consumer shift towards trends such as output
from cage-free hens.
"The higher price gap between conventional eggs and
specialty eggs has resulted in reduced demand for specialty eggs," he said,
adding that Cal-Maine had curtailed its own output plans in response to the
"We have adjusted our production levels in line with current
customer demand for cage-free eggs."
The comments came as Cal-Maine Foods unveiled an after-tax
loss of $15.9m for the quarter, equivalent to $0.33 per share, on revenues up 9.6%
While the loss was down by 49% year on year, it was above the
figure of $0.22 per share expected by investors.
Cal-Maine shares plunged 6.3% in early deals, they had
recovered nearly all lost ground within an hour of trading to stand at $40.80,
down 0.7% on the day.