Industry clucks about egg prices
The U.S. egg industry has an oversupply issue, and prices are so unprofitable that Cal-Maine, the biggest U.S. producer, posted its first net loss in six quarters.
But prices may be near, if not at, their lowest. Producers are losing money, and that’s going to force farms to make adjustments and shrink output, Cal-Maine’s Chief Financial Officer Max Bowman said.
The number of hens in the U.S. are near a record high, and they are more productive than ever. Average market prices fell by more than half from a year ago in the Southeast, Cal-Maine Foods Inc. said in a statement.
Prices could continue to see pressure through calendar 2019 if egg supplies continue their growth trend.
Even with the dismal pricing of commodity eggs, Cal-Maine, the consolidator in the industry, hasn’t seen a big increase in opportunities for deals. However, the company has been in some deal discussions.
“We are seeing some possibilities, and it’s clear a lot of people in the industry are hurting right now,” Bowman said.
A lack of trade agreements for the U.S. with key partners also has been having an impact on egg prices, Bowman said, with exports in the first half down 12 percent. A global glut is also weighing on world prices.
However, American prices may be cheap enough now to stimulate purchases from foreign buyers, he said.