TOP STORIES

Cal-Maine Sales Fall 37% In Latest Quarter

Cal-Maine Foods Inc. (CALM) swung to a loss and said sales fell in its latest quarter as prices for eggs weakened.

Cal-Maine on Monday reported a quarterly net loss of $19.8 million, or 41 a share, compared with a profit of $71.8 million, or $1.48 a share, a year earlier. Sales fell 37% from the year earlier to $280.6 million.

Cal-Maine Anticipates Volatile 2020 as Feed Costs Rise -- Market Talk

09:46 ET - Cal-Maine Foods says it anticipates volatile grain prices in its next fiscal year, thanks to the flooding that hit the Midwest this spring as well as "ongoing uncertainties and geopolitical issues surrounding trade agreements." Cal-Maine reported F4Q results, and said it saw its feed costs rise 5.3% this fiscal year--coinciding with a 52% drop in market price for eggs. The company reported a $19.8M loss it attributed to the wet weather, "which resulted in higher ingredient prices at some of our larger feed mill operations." December corn futures on the CBOT hit a year-high of $4.74 per bushel in June, and have since fallen but are still up 6.4% since the start of the year. Cal-Maine shares off 2.7%.(kirk.maltais@wsj.com; @kirkmaltais)

STORIES OF INTEREST

The Perils of Swine Fever Mania -- Market Talk

12:45 ET - Meat stocks like Tyson Foods, JBS and Pilgrim's Pride have soared this year as African swine fever decimates China's hog herds, which could boost global meat prices for years to come. Given the meat industry's predilection toward boom-and-bust cycles, though, Mizuho suggests caution: China may throw up import barriers to protect its own pork industry as it recovers from the disease, and given limited information on the scale of the loss to China's hog farms, international meat companies could overestimate demand and create a new meat glut. That said, Mizuho remains a believer in swine fever's potential effect on markets: "if the numbers are real and the borders are truly open, we are likely meaningfully underestimating the [meat industry's] earnings power for at least the next three years." (jacob.bunge@wsj.com; @jacobbunge)

Egg Glut Dings Cal-Maine Foods -- Market Talk

1205 ET - Egg producer Cal-Maine Foods is struggling with a glut of eggs that has pushed down prices in key regions, including the southeast, where average-market prices for conventional eggs plunged 52% in its fiscal fourth quarter compared with last year. The number of hens laying table eggs in the US rose about 1% for the May-June period to 332M and they are getting more productive, according to data from the Agriculture Department. Cal-Maine's customers include restaurant chains and grocers, with Walmart accounting for about one-third of sales during its last fiscal year. Shares fall 2.5%. (micah.maidenberg@wsj.com, @MicahMaidenberg)

Fast-Food Stocks Are No Value Meal -- Heard on the Street

Much like American consumers, investors can't seem to get enough fast food. They will likely require a strong upcoming earnings season to stay satisfied.

Shares of the largest such companies set to report quarterly results this week have performed admirably lately. Chipotle Mexican Grill has rallied about 75% so far this year while Starbucks and McDonald's are up about 45% and 20%, respectively.

FUTURES MARKETS

Cattle Finishes Higher, Hogs Settle Lower -- Market Talk

15:48 ET - October live-cattle futures on the CME finish trading up 0.6%, at $1.09150 a pound. Traders say cattle futures have been undervalued versus cash prices, and they expect cattle futures to continue to move up higher until they reach where cash prices are trading at--roughly $1.15-1.16 per pound. Lean hogs, meanwhile, fall 0.8% to 83.225c as rumors of new Chinese interest in goodwill agricultural purchases fizzle out--a downer for hog futures that have been reactive to developments in trade negotiations by the Trump Administration. (kirk.maltais@wsj.com; @kirkmaltais)

CASH MARKETS

 
Estimated U.S. Pork Packer Margin Index - Jul 22 
 
Source: USDA, based on Wall Street Journal calculations 
All figures are on a per-head basis. 
 
Date     Standard Margin       Estimated margin 
         Operating Index         at vertically - 
                             integrated operations 
Jul 22       -$  4.54            +$ 40.35 
Jul 19       +$  0.54            +$ 37.32 
Jul 18       -$  2.24            +$ 32.16 
 
* Based on Iowa State University's latest estimated cost of production. 
A positive number indicates a processing margin above the cost of 
production of the animals. 
 
Beef-O-Meter 
This report compares the USDA's latest beef carcass composite 
values as a percentage of their respective year-ago prices. 
 
                                 Beef 
          For Today             Choice  104.5 
      (Percent of Year-Ago)     Select   96.2 
 
USDA Boxed Beef, Pork Reports 

Wholesale choice-grade beef prices Monday fell 10 cents per hundred pounds, to $213.32, according to the USDA. Select-grade prices rose 8 cents per hundred pounds, to $189.59. The total load count was 109. Wholesale pork prices rose $1.41, to $79.17 a hundred pounds, based on Omaha, Neb., price quotes.

(END) Dow Jones Newswires

July 22, 2019 17:37 ET (21:37 GMT)

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