Eggs are a cornerstone of the American diet. The average American consumes 284 eggs annually.

Given this reliance, disruptions to the egg supply can have profound effects on consumers. Since 2022 farmers have had to contend with a highly transmissible strain of bird flu which forced farmers to kill millions of egg-laying chickens. 

And given the fact it takes time for new chickens to mature and start laying eggs, it can take months for farmers to recover their production.

In recent years, these supply disruptions have translated into elevated egg prices, which has in turn benefitted egg producers and outweighed the costs of supply disruptions.

Cal-Maine Foods (CALM), the largest egg producer in the United States, has seen its returns surge from 6% in 2020 to 58% this year. However, the market doesn’t think the company can sustain these returns due to the cyclical nature of this commodity industry.

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Eggs are a staple in the American diet, with the average consumer eating up to 284 eggs per year. 

As such, disruptions to the supply of eggs have a profound effect on consumers. People immediately recognize when the price of eggs is on the rise, as has been the case for recent years. 

In 2022, a fatal and highly transmissible strain of bird flu swept through chicken populations around the country, forcing farmers to kill more than 100 million egg-laying hens in total over the past three years. 

Given the fact that hens take months to mature and begin laying eggs, shortages have been hard for companies to quickly rectify. These shortages have resulted in rising egg prices, and in some instances limits on how many eggs a single person can purchase at stores. 

In 2021, a dozen eggs cost on average $1.67. In 2022 prices peaked at over $6. And today, while hen populations have recovered and egg prices stabilized, a dozen eggs still costs more than $3.5, well above 2021 levels.

Since 2022, farmers have contended with a fatal and highly transmissible strain of bird flu, leading to volatile supply and prices.

While volatile supply and rising prices have hurt consumers, Cal-Maine Foods (CALM) has benefitted. Cal-Maine is the largest egg producer in the world, accounting for 20% of the eggs consumed in the U.S. Annually, it sells over a billion dozen eggs.

Due to its market position and size, Cal-Maine has been the primary beneficiary of recent price increases.

Cal-Maine’s Uniform return on assets (“ROA”) has risen from 6% in 2020 to 45% in 2023. While returns dipped in 2024, the company’s ROA surged to 58% this year while achieving a Uniform asset growth of 17%.