German conglomerate BayWa, which owns the Cefetra grains and feed materials procurement and shipping business among other interests, predicts a positive second half for its agriculture division as society recovers from the Covid-19 pandemic and its control measures.
The multinational expects its international agricultural trading to benefit from strong export and marketing activities in Southern Europe – which has been particularly hard hit by Covid-19 crisis, and from continued stability in its specialities trading. It adds that the 2020 harvest volumes and quality forecast for Germany and Austria will lift trade in its core regions.
In addition, demand for agricultural inputs could also recover if farmers take advantage of historically low fertiliser prices, while reductions in value added tax rates will provide an additional incentives to invest in agricultural equipment.
BayWa’s Agriculture Segment reported an EBIT of €61.6 million on revenues of €5.6 billion for the first six months of 2020, compared to €53.6 m and €5.7 billion a year earlier.
Political uncertainty affects soymeal trading
While supply chains “fundamentally stood the test” of Covid-19, the company’s international trade in grain and oilseeds was negatively affected by trading restrictions, particularly in southern Europe which suffered more than other regions.
At the same time, political uncertainties such as the trade dispute between the US and China had an adverse impact on soymeal trading - attractively priced imports from the US leading to price pressure in Europe.
The dry spring in Germany and pressure on margins affected trade in fertilisers, while the group’s seed business saw a shift towards higher-margin product lines and catch crops.
“In an environment strongly influenced by the coronavirus pandemic and by difficult macroeconomic conditions, BayWa fulfilled its basic supply function in the fields of agriculture, building materials and energy,” noted BayWa chief executive Klaus Josef Lutz. “An unusually strong second quarter more than made up for the typical seasonal decline in the first three months.”