Cargill rebounded from its worst quarter in a decade to one
of its best, as the return of dire harvests to the top of food industry priorities
played to the strengths of a group caught out by last year's politically-swayed
The US agribusiness giant, one of the world's biggest
private companies, reported earnings of $975m for the June-to-August period, its
best result since the tail end of the last grain price spike four years ago.
Indeed, Cargill earned nearly as much in the period as in the whole of its previous financial year, a factor chief executive Greg Page said reflected
demand by customers for surety of agricultural commodity supplies at a time
when poor weather has damaged harvests in the European Union, former Soviet
Union and US.
"Now more than ever Cargill is using our knowledge and
market insight to help customers manage in this time of tighter supplies," Mr
Cargill said that, overall, the impact of the US drought had
been "mixed", providing setbacks to US crop exports, an important earner for
the group, while setting up the group's meat production businesses "for a
challenging year" as they negotiate elevated feed prices.
However, all of the company's five major divisions achieved
improved earnings in the latest quarter.
"There were no significant losses in any one business unit,
a factor that affected the year-ago period", when its risk management
operations were caught out by volatile financial markets.
And the company forecast a boost from the "atypical trade
flows" forced by the poor harvests, a dynamic that "calls upon [Cargill's]
capabilities in market analytics, risk management and logistics".
"We are tapping the full resources of Cargill to create solutions
that address [customers'] needs," Mr Page said.
Contrast to last year
The upbeat comments contrast with those a year ago, when Mr Page
reported a "tough quarter", with Cargill tested by the "degree of uncertainty
in the global economic environment, which injected turbulence into commodity
markets and limited prudent trading opportunities.
"The prevailing 'risk-on, risk-off' dynamic in financial
markets caused capital to move in and out of commodities rapidly," said the
group, which acknowledged the difficulty in negotiating agricultural markets
moving on politically-based factors, such as the eurozone crisis, rather than
conventional supply and demand influences.
The rise in earnings in the latest quarter came despite a
drop of 2.3% in earnings to $33.8bn.
It also follows a spending spree backed by proceeds from the
disposal of its stake in fertilizer group Mosaic which has seen Cargill acquire
businesses including feed giant Provimi.