Strong livestock markets helped Cargill to a firm close to a
strong year, even helping the group's grain origination and processing arm
overcome the setback of becalmed markets, which "limited" trading opportunities.
The US-based group – with Archers Daniels Midland, Bunge and
Louis Dreyfus one of the "ABCD" of agricultural trading giants– reported earnings
of $460m for the March-to-May period, the fourth quarter of the company's financial
year, "in sharp contrast" to a $19m loss a year before.
The improvement, on revenues up 4.4% at $28.3bn, drove
full-year earnings to $2.84bn - Cargill's strongest result in eight years.
And it reflected in particular strength in protein markets, evident
in strong rises in live cattle futures to highs in April, while lean hog values
have continued to rise, hitting 92.80 cents a pound on Wednesday for July
delivery, the highest for a spot contract since late 2014.
The group said that its animal nutrition and protein
division was the "largest contributor to adjusted operating earnings" in the
quarter, and indeed that the global meat operations had recorded an "exceptional
performance" over the year.
In North America, the protein operations tapped "strong demand",
at the retail level for beef and, in eggs, from food service companies.
"Export demand for beef also was brisk."
US beef exports over the first five months of this year
reached 497,322 tonnes, up 12% year on year, according to the US Meat Export Federation.
The animal nutrition operations reported a rise in earnings
thanks to "favourable trading and cost reductions".
Indeed, the demand for feed boosted results in Cargill's origination
and processing division too, as strong US crop supplies from record harvests
last year "met with brisk demand from global growth in livestock production.
The performance helped return the origination and processing
division to a fourth-quarter profit, even though in crop trading "opportunities
were limited by low volatility in many commodity markets".
Cargill's more North America-focused grain export operations
also benefited from a boost to US shipments from the slow selling by South
American farmers which has presented a headwind to rivals such as Bunge more
dependent on trade in nations such as Brazil.
Cargill added that it had repurchased some $2.1bn of debt
over the year, which "will lower future interest expense".
And it flagged the changes in agriculture and food which had
left Cargill, and its customers, operating "in environments of much greater
The group wanted to be customers' "most trusted partner in
agriculture, food and nutrition", said David MacLennan, the Cargill chairman
and chief executive.