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Cal-Maine spared in flu outbreak — as shares soar

 

By JACK WEATHERLY
Cal-Maine Foods thus far has been unscathed in the outbreak of avian flu, which has forced egg producers in the Midwest to kill and dispose of millions of laying hens, said the Jackson-based company’s chief financial officer, Tim Dawson.
Meantime, Cal-Maine has benefited from the outbreak. Its shares have risen from $38.38 on March 20, the day it reported a near-record net income for the quarter at $50.9 million, to $54.95 on Friday on the Nasdaq stock market, approaching a 52-week high.
The company “is uniquely positioned to resupply depleted flocks,” USA Today reported. It leads the nation in production of in-shell fresh eggs, with about a quarter of the market.

The outbreak has driven up prices in the Midwest.

The Associated Press reported last week that the price of a dozen large eggs in the Midwest jumped nearly 17 percent to $1.39 a dozen from $1.19 since the mid-April flu breakout in Iowa.

A much bigger increase has emerged in the eggs used as ingredients in processed products such as cake mix and mayonnaise, which account for the majority of what Iowa produces, the AP said. Those eggs have jumped 63 percent to $1.03 a dozen from 63 cents in the last three weeks, said Rick Brown, senior vice president of Urner Barry, a commodity market analysis firm.

“None of our operations have had an outbreak of the flu,” Dawson said in an interview on Friday. “Which doesn’t mean that we won’t. We’re clearly at risk, as all of the producers in the industry are.”
Iowa has been hit the hardest, Dawson observed, along with Minnesota, Nebraska, Indiana and Wisconsin.
Cal-Maine is on heightened alert, Dawson said. “We’re constantly evaluating our bio-security measures,”  which include the washing and disinfecting of vehicles entering its facilities.
The company has never been struck by the influenza, he added.
After an outbreak is reported to the federal government, producers are reimbursed to some degree for birds that have to be destroyed after the report, he said.
The New York Times said on Thursday that avian flu has affected more than 33 million chickens, turkeys and ducks in more than a dozen states since December.
“While farmers in Asia and elsewhere have had to grapple with avian flu epidemics, no farmers in the United States have every confronted a health crisis among livestock like this one,” The Times said.
Cal-Maine has about 34 million laying hens and 40 facilities in 15 states, one of which, Nebraska, had an outbreak at one facility this week.
The company announced April that it had entered  a joint venture with Rose Acre Farms Inc. of Seymour, Ind. to build a “cage-free aviary” in Bogata, Texas, and begin operations in August.

 

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