The Jackson, Miss.-based company's revenue rose by 28% to $243.8 million, primarily on the back of price increases. But net income declined because of a 45% jump in the year-on-year cost of corn to $0.484 per dozen eggs produced. The company's chief executive, Dolph Baker, said feed costs are likely to remain very high and volatile until May of next year. The dividend got a serious haircut in the process -- down from 10.2 cents per share last quarter to just 4.4 cents.
Not just a chicken-and-egg situation
It's not just Cal-Maine that is embroiled in this problem. The poultry industry has also been affected by escalating feed prices, particularly those of corn, forcing some growers to switch to wheat to feed their clucking commodities.
Broiler-meat companies like Sanderson Farms
On the other hand, hog producer Smithfield Foods
The Foolish bottom line
Given the high input prices, many food producers like Cal-Maine will continue to face challenges -- and the problem is compounded by the high degree of competition in this sector, which, in turn drives margins further down. It will be interesting to see how the next few quarters pan out for the industry in general and Cal-Maine in particular.