Search Here

Cal-Maine Foods, the largest egg producer in the US, is under investigation by the US Department of Justice (DOJ) amid rising concerns over skyrocketing egg prices.

The Mississippi-based company confirmed the probe on Tuesday, noting that it received a notice last month regarding the DOJ's investigation into the causes behind the national surge in egg prices.

According to CNN, Cal-Maine is cooperating with the inquiry, but the news led to a 4% drop in the company's shares during after-hours trading.

Egg prices have soared to unprecedented levels in recent months, largely due to a bird flu epidemic that led to the culling of over 166 million egg-laying chickens across the US.

As of February, a dozen Grade A eggs averaged $5.90, a 10.4% increase from the previous year.

This sharp rise in prices has put Cal-Maine, which supplies about 20% of the nation's eggs, under heavy scrutiny.

In its latest financial report, Cal-Maine posted a significant increase in revenue, nearly doubling to $1.42 billion in the fiscal third quarter, ending March 1.

This surge was driven largely by higher egg prices, which averaged $4.06 per dozen during the quarter, compared to $2.25 a year ago. Despite this strong performance, the company's sales fell short of analysts' expectations of $1.43 billion.

Cal-Maine's Sales Surge, But Egg Price Hikes Spark Political Concern

The price hikes have sparked concern not just among consumers but also in the political arena.

In response, President Donald Trump urged the US Department of Agriculture (USDA) to devise a plan to address the soaring prices, pointing to the impact of avian flu on egg supplies.

Meanwhile, Cal-Maine President and CEO Sherman Miller acknowledged the volatile market conditions, attributing the price hikes to the bird flu and ongoing supply shortages.

"Despite the challenging supply environment, we have managed to maintain our focus on meeting customer needs while honoring our longstanding pricing frameworks," Miller said.

While Cal-Maine's net income surged to $508 million, a 245% increase from last year, it still fell short of analysts' forecasts, NTD said.

The company's record sales of 331.4 million dozen eggs in the quarter represented a 10% increase from the previous year. Additionally, Cal-Maine announced the acquisition of Echo Lake Foods, a move seen as part of its strategy to diversify its product portfolio.

Looking ahead, Cal-Maine officials expect continued volatility in the egg industry due to factors like bird flu, rising production costs, and fluctuating consumer demand.

Although egg prices have begun to drop, falling below $3 a dozen last week, the industry remains on edge as the DOJ investigation continues.