US egg producer Cal-Maine Foods posted a 38% drop in gross profit for its fiscal first quarter due to higher feed costs outpacing a strong demand for eggs.

For the 13 weeks to 30 August, gross profit dropped to US$11.1m from $18m for the same period last year.

Operating profit fell, reaching $17.9m from $26.9m in the first quarter of Cal-Maine's last fiscal year.

Net sales were up 16% to $206.9m, compared with $178.6 million for the same period last year.

"Egg prices and total dozens sold were both up for the first quarter of fiscal 2009 compared with the same period last year," said Fred Adams, chairman and CEO of Cal-Maine Foods. "Demand for eggs was strong in both the retail and food service markets. However, our feed costs were dramatically higher and reduced the company's earnings for the quarter compared with a year ago."

The company said corn and soybean meal prices peaked in July, but dropped substantially in the last few weeks. While estimates for the final crop yields vary widely, Cal-Maine expects feed prices to remain volatile and high for the year ahead.