(Bloomberg) -- There are just too many eggs in the U.S.
Cal-Maine Foods Inc., the largest U.S. producer, dropped as much as 14% Monday after posting first-quarter earnings that showed dismal selling prices for its products.
As the likes of Walmart Inc. and McDonald's Corp. demand a switch to eggs from hens that live in barns instead of tiny cages, producers are expanding cage-free output. Meanwhile, conventional egg production isn't being taken offline. The oversupply has spurred an “extreme drop” in prices, Dolph Baker, chief executive officer of Cal-Maine, said in a statement Monday.
The company's average sales price for eggs was down 30% this quarter compared to last year. The glut may continue, with a Sept. 1 government report showing 800,000 more laying hens than last year. Feed costs have remained flat.
Cal-Maine is focused on growing its specialty egg business, which includes cage-free, organic and other categories, and doesn't experience as much price volatility as commodity eggs, Baker said. The company has capital projects to expand cage-free production in Florida, Utah and Texas.
The company reported a wider-than-estimated loss per share and lower-than-expected sales in its first fiscal quarter.
To contact the reporter on this story: Lydia Mulvany in Chicago at lmulvany2@bloomberg.net
To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net, Reg Gale, Joe Ryan
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