China’s 40% egg-price spike is the same overexpand-then-cull cycle that whipsawed American farmers twice in three years. The producers who keep a fat balance sheet through the crash are the ones who get rich in the shortage.
China’s egg prices jumped more than 40% in a year because farmers added too many hens, panicked when prices crashed, and killed off their flocks so fast that a glut flipped into a shortage. The United States ran the identical cycle in 2023 and again in 2025. Cal-Maine Foods, the largest US egg producer, booked $1.22 billion in net income off the 2025 version. The egg business is a case study in how a low-margin commodity trap rewards the company with the strongest balance sheet, not the biggest barn.
In China, the egg stopped being a supporting ingredient this summer and became the story. Families are grumbling at dinner. Farmers who drowned in surplus eggs last year now scramble to find them. State media coined a name for the surge: “rocket eggs.”
What happened
Egg prices across China’s top producing provinces are up more than 40% from a year ago, and one wholesale benchmark in Guantao, in the north, hit a 10-year high that caught the industry off guard. In a country that eats more eggs per person than almost anywhere on earth, that hurts. It also looks strange against the wider economy, where China has fought deflation for years. Pork, the national staple protein, recently touched a 16-year low. Eggs went the other way.
The squeeze reaches the street vendor. Axuan Bu, 25, runs two jianbing stalls in the eastern city of Jinhua and burns through 360 eggs every two to three days. A carton that cost him $25 now runs $35. The gas canisters he needs to heat his pan climbed to $22 from $16, one more cost stacked on by higher energy prices tied to the war in Iran. He can’t raise the price of a savory egg crepe without losing his regulars. “You bustle around month after month,” he said, “and by the end of it, there’s simply nothing left.”
The backstory
The trigger was too many chickens. After several good years, Chinese farmers expanded harder than ever from 2024 into 2025, adding record numbers of egg-laying hens, according to egg-market analyst Aspen Li. Supply overshot demand and prices collapsed. Farmers who suddenly couldn’t afford feed did the rational short-term thing and culled their flocks, at a rate analysts considered excessive. Months later, with too few hens left, the market snapped from surplus to scarcity. Prices ran past even Li’s expectations.
Strong seasonal demand poured fuel on the fire: teenagers cramming for the gaokao national exam, families cooking for the Dragon Boat Festival. Cooking-gas inflation from the Iran war did the rest.
The plan
There is no central plan here, and that is the point. No one coordinates how many hens China’s farmers raise. Each farmer watches today’s price and decides alone, and because a chick takes months to become a laying hen, every farmer is steering by a price that will be stale by the time the eggs arrive. Economists have a name for this trap, the cobweb cycle: producers overreact to high prices by overbuilding, crash the market, overreact to the crash by cutting too deep, and set up the next spike. Eggs, hogs, and other short-cycle farm goods run this loop on repeat.
The business model angle
The American egg market shows what the loop does to a company’s books. Cal-Maine Foods (NASDAQ: CALM), the largest US producer, lives entirely inside this cycle, and its net income reads like a seismograph.
In fiscal 2022, before bird flu tore through US flocks, Cal-Maine earned $132.7 million. When highly pathogenic avian influenza wiped out tens of millions of hens and prices spiked, fiscal 2023 net income jumped to $758 million. Then supply recovered, prices normalized, and fiscal 2024 profit collapsed to $277.9 million. A second, larger bird-flu wave hit, the industry lost more than 79 million birds between early 2024 and mid-2025, and fiscal 2025 net income exploded to $1.22 billion. Same company, same product, four wildly different years.
That volatility explains why the real business model is not “sell eggs.” It is “survive the trough intact so you can harvest the spike.” Cal-Maine runs the playbook openly. It holds a strong, near-debt-free balance sheet so a bad year doesn’t kill it. It pays a variable dividend equal to one-third of quarterly profit, generous when eggs are dear and near-zero when they aren’t, so it never bleeds cash defending a payout. It buys distressed competitors and capacity during downturns, folding in Fassio Egg Farms and others when weaker producers fold. And it keeps pushing into specialty eggs (now more than a third of its shell-egg sales) and prepared foods through its Echo Lake acquisition, chasing prices that swing less than the commodity carton.
The buyers play the cycle too. Costco treats cheap eggs as a traffic magnet and eats commodity swings to protect the membership model that actually earns its money, the same logic behind its $4.99 rotisserie chicken. Whole Foods goes the opposite way, steering shoppers toward premium cage-free and organic eggs that carry higher, stickier prices and insulate the shelf from the raw commodity’s whiplash. Neither retailer wants to sit at the mercy of a wholesale spot price set by a chicken shortage two provinces or two states away.
The risk
Getting rich on a shortage draws a target. Cal-Maine is cooperating with a Department of Justice probe into egg pricing and already carries a $43.6 million trebled-damages antitrust judgment. Profiteering while families ration protein is politically radioactive, in the US, where eggs became a 2024 campaign talking point, and in China, where “rocket eggs” is now a state-media phrase.
The cycle also punishes anyone who mistakes the spike for a trend. Fiscal 2024’s collapse is the warning: buy in at the top of the egg market and the cobweb loop hands you the crash. Cage-free mandates keep raising the capital cost of a hen, feed prices (corn and soy) swing the cost side, and energy shocks like the Iran war lift everything at once. In China, the state can also cap prices or release reserves and end the party early.
Quick questions
Why are China’s egg prices rising when its economy is deflating? Deflation is a demand-and-overcapacity story across manufactured goods and pork. Eggs moved on a supply shock instead: farmers over-culled hens after a glut, so scarcity, not strong demand alone, drove the price up.
Did the same thing really happen in the US? Yes, twice. Bird flu culled the flock in 2022-2023 and again in 2024-2025, and prices spiked both times. China’s version is farmer-driven overexpansion rather than disease, but the overbuild-then-cull mechanism is the same.
How does an egg company make money when prices swing this hard? By managing the balance sheet, not the barn. Cal-Maine keeps low debt, pays dividends only when profitable, buys weaker rivals in downturns, and shifts toward specialty and prepared foods to smooth the ride.
Is Cal-Maine a bet on high egg prices? Partly, and that cuts both ways. Its profit quadrupled into fiscal 2025 on the shortage, but shares later slid when a quarter missed as supply recovered. You are buying a commodity cycle, not a growth story.
The Business Model Analyst Take
Commodity producers don’t win by being efficient in good years. Everyone looks efficient when the spot price triples. They win by not dying in the bad years, then buying the assets of the ones that did. Cal-Maine’s $1.22 billion haul wasn’t a bet that eggs would stay expensive. It was the payoff for keeping a boring, over-capitalized balance sheet through fiscal 2024’s slump so it had cash and credibility when the next shortage arrived. China’s farmers are the other half of the lesson: thousands of undercapitalized operators, each culling to survive the trough, together manufacturing the very shortage that will reward whoever is still standing. If you run any business exposed to a boom-bust input, the egg carton is the whole strategy on one shelf. Balance-sheet strength is not caution. It is the option to be greedy when your competitors can’t be.
