Don’t give up in oilseeds.
Sure, Archer Daniels Midland boss Juan Luciano says the group is “reallocating capital spending away” from an oilseeds sector “where generally there is adequate capacity”, and which was partially responsible for the company’s below-par results for the July-to-September quarter.
But that does not mean that the industry is a dead loss.
Just take China, on which Mr Luciano’s positive take extended beyond that of the corn and ethanol import ideas reported elsewhere on Agrimoney, and where flagged “very, very strong” demand for vegetable protein.
‘The gold standard’
“If you think about so far this year when you compare to last year, crush in China has increased 11% and soymeal destination stocks have basically stayed flat,” he told investors.
“So it means, there has been a true demand growth of 11% in China, which is very strong.”
And soymeal is indeed “always the preferred choice” of feed protein, ahead of the likes of distillers’ grains, or DDGS (which ADM also produces).
“It is the gold standard,” he said, flagging this as a “little bit of a green shoot” to oilseed processing prospects, at a time when meal demand worldwide is “expected to accelerate in the near-term”.
‘A lot of pressure’
Not, it has to be said, that all origins may prove equal beneficiaries of this trend, with European Union processors looking a bit on the back foot.
Mr Luciano, who was brought in up Argentina, flagged “a lot of pressure in terms of the South American crop impacting, particularly, the European operations” of ADM in the latest quarter.
“A lot of meal, actually, from Argentina went over to Europe, and actually caused that to have one of our lowest quarters from a crush perspective over in Europe.”
With the euro, while lower against the dollar, continuing to make a little ground against the Argentine peso, that trend might persist for the time being.