Cargill underlined the difficulty of profiting in crop
trading at time when heavy supplies are dampening volatility, as the ag giant
revealed had, again, relied on its protein and feed division for driving growth.
The US-based group, one of the world's largest privately
held companies, unveiled a 14.2% rise to $973m in earnings for the
June-to-August period, the first quarter of its fiscal year, on revenues up
0.7% at $27.3bn.
"We're off to a strong start to our new fiscal year," said
David MacLennan, the Cargill chairman and chief executive, with the group also
announcing a 7.4% increase to $827m in underlying operating profits.
However, growth reflected in particular, as it did in the
group's last financial year, strength in the animal nutrition and protein arm,
which reported underlying operating profits "up significantly".
In North America, Cargill flagged a boost from "brisk
consumer demand for beef, strong exports, and more abundant cattle supplies".
US beef packers' margins exceeded $500 per head of cattle in
late June, according to Steiner Consulting, the highest level since at least 2013,
and up by roughly one-third year on year as the strong demand factors supported
beef prices, at a time when the more generous cattle supplies kept a lid on
In feed, the group reported gains in additives and premixes markets,
although this was offset by some weakness in aqua feeds in Europe and swine sector
operations in Vietnam.
Cargill's origination and processing division, meanwhile,
reported a drop in profits, amid a "challenging environment" fostered by a
succession of strong global harvests.
The group, while reporting a "positive" trading result, said
that "although global demand for grain and oilseeds continues to grow, rising
production and building global stocks during the last four crop cycles has
depressed market volatility and commodity prices".
The division was "working to increase productivity in its
supply chain", Cargill said.
The comments represent the latest in a series by a major agricultural
trading house flagging the difficulty of reaping trading gains in less volatile
times – despite the extra volumes of crops to deal with.
Cargill also underlined investments in new markets and technology,
including its purchase of a stake in California-based Memphis Meats, which is
developing ways of growing meat from animal cells.
"Over time, cultured proteins could potentially complement
conventionally produced meats as part of the equation to sustainably nourish
the future," Cargill said.
The group also flagged its partnership with Austria-based Delacon,
which makes so-called phytogenic feed additives, which aim to harness to plant
compounds to promote the likes of bacterial resistance in animals, and reduced
emissions of methane.