Shares of Cal-Maine Foods Drop Amid DOJ Antitrust Investigation

Shares of Cal-Maine Foods, the largest egg producer in the U.S., saw a significant decline in after-hours trading on Tuesday, dropping over 4% following the company's disclosure of an ongoing investigation by the antitrust division of the U.S. Department of Justice. This investigation pertains to the rising egg prices that have sparked concern among consumers and regulators alike. Cal-Maine received the notice of the inquiry last month and has stated its commitment to cooperate fully with the DOJ. Egg prices have surged to record levels in recent months, with one dozen Grade A eggs priced at an average of $5.90 in February—up 10.4% from the previous year. This increase can be largely attributed to a severe bird flu epidemic that has resulted in the culling of more than 166 million birds, predominantly egg-laying hens. The scrutiny on Cal-Maine is further heightened by the fact that they account for nearly 20% of the nation’s egg supply. Despite a nearly doubling in sales to $1.42 billion for the fiscal third quarter ending March 1, due to price increases that saw averages rise from $2.25 to $4.06 per dozen, the company’s results fell short of Wall Street forecasts. Compounded by the recent spike in egg prices, which eclipsed previous records, the investigation raises questions on market practices and consumer protection. In addition to the price surges, Cal-Maine’s third-quarter net income tripled year-over-year to $508.5 million, reflecting the impact of higher egg prices on profitability, although it too was below analyst expectations. As the company works to recover from bird flu impacts—including the closure of facilities in Texas and Kansas—they have successfully increased production metrics, managing the crisis in line with operational adjustments such as lowering feed costs. Moving forward, the outcome of the DOJ investigation could have significant ramifications not just for Cal-Maine, but for the broader egg market and consumer prices. This scenario highlights ongoing tensions between agricultural producers, market prices, and regulatory oversight in a time of economic volatility.