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Cal-Maine Foods, Inc. Message Board

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  • georgespelvin Jul 28, 2008 2:36 PM Flag


    if you experience higher costs quietly it is hard to pass on those costs in a competitive market. but if the whole world is reeling from higher petroleum costs and the headlines are everywhere and the citizens are incensed about $85 tanks of gasoline and you are selling eggs for a few pennies a dozen and your costs go up you can jack up the prices of your incredibloy cheap commodity (eggs are still incredibly cheap per gram of protein, and easy to cook) not only to recoup your costs but to add margin to those costs.

    That is what CALM and every other egg producer has done. The people who raise chickens for meat have not been able to do that. But egg producers have.

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    • NO!!! They cannot pass on those costs at will! What they get for their eggs is determined by the market. Period. If you could, then why has the price of eggs fallen 40% in the last 4 months while feed has gone up? It's just like oil. People blame Big Oil for excessive profits, but they do not determine the price per barrel, the market does. The cost to hire rigs has skyrocketed, but the companies that hire them don't get more money for their product because rig rates went up.

      • 2 Replies to marsh23gh
      • Where in the heck do you buy your eggs that are down 40%?

      • georgespelvin Jul 29, 2008 4:18 PM Flag

        of course the market controls the prices. calm is subject to the market just like everyone else. but the egg market was much more elasatic than the chicken as meat market. that is obviously true or tyson would have had a profit and calm would not.

        the profitability of calm is the remainder of prices minus costs so we will see if the prices fall faster than the costs. I dont think they will. they have not as the costs went up. As the costs went up their prices went up more. that is pricing power. not just for calm. for the whole industry obviously. i do not focus these comments on calm but on the industry of which calm is an exemplar.

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