Cargill returned to profits growth, as much-improved North
American harvests stoked demand for its marketing and handling services, but
improvement was held back by overcapacity in the oilseed crushing industry.
The agribusiness giant, one of the world's biggest privately
held companies, said that earnings soared 36% to $556m in the
September-to-November period, "supported in part by 2013's improved crop
Cargill - whose profits the previous quarter were dented by
a dearth of crop to handle after 2012's drought-hit US harvests – said that
farmers' better fortunes last year, when the US achieved a record corn crop and
Canada record corn and canola output, had boosted the performance of its North
American agricultural supply chain division.
"Profits increased due to higher grain handling and export
volumes, along with renewed demand for grain marketing products," the
Minneapolis-based group said.
The lower crop prices prompted by the strong harvests had,
besides being reflected in a 6.5% drop to $32.9bn in group revenues, helped margins
at Cargill's grain consuming operations, "providing relief to Cargill's animal
nutrition and protein segment".
Indeed, profits at feed and protein operations "rose
significantly", thanks to the lower crop prices, a decline which, in meat production,
"eased last year's high feeding costs".
Higher beef exports also boosted earnings, the group said,
in comments which follow industry data showing US shipments in November rose 11%
year on year by volume to 101,341 tonnes, and by value by 16% to a record $524.5m.
Cargill also flagged raised demand, both within the US and
on export markets, for ethanol, whose manufacture has become more profitable
sector thanks to last year's tumble in prices of corn, the main raw material,
which dropped by 40% on Chicago's futures market.
'Build-up in oilseed
However, the group revealed that its agricultural supply
chain division overall saw profits decline during the latest quarter, hurt by
an excess of global processing capacity.
Cargill highlighted "an industry-wide build-up in oilseed
crush capacity that reduced crush volumes in certain markets, including South
Companies expanding in oilseeds last year included Glencore,
which reported a 38% rise in crushing volumes in the first nine months of 2013,
after opening its Timbues plant in Argentina.
Meanwhile, Argentine farmers have been limiting the sale of
crops which, in being traded in dollars, are viewed as a hedge against the
country's long-running currency deflation.
Cargill itself has fuelled the rise in world oilseeds
processing capacity by expanding a plant in North Dakota and beginning work on
the construction of its first crushing facility, for sunflower seeds, in Russia.
Cargill also highlighted a boost to its fortunes from the
reviving cocoa market, noting "firmer demand and sales volume" for cocoa
Improved demand for cocoa, which is expected to exceed
production for a second successive season in 2013-14, helped lift futures in the bean to two-year highs in
London and New York last month.
Cargill is reported to be in talks to buy Archer Daniels
Midland's cocoa division, valued by analysts at some $2bn.
Cargill last month unveiled plans to double capacity its biggest
European chocolate facility, in Mouscron, Belgium.