Linked In
News In
Linked In

You are viewing 1 of your 2 complimentary articles.

Register now to receive full access.

Already registered?

Login | Join us now

Cargill's trading business struggles amid low volatility

Twitter Linkedin

Cargill, one of the world's top agribusinesses, scraped a profit over the March to May period, thanks to inventory adjustment and asset sales.

But the company's grain trading business plunged into the red, as low volatility and prices weighed on earnings, as three years of good harvests leave scant opportunities for traders to turn a profit.

The privately held company reported net income of $15m over the three months to May 31, compared with a net loss of $51m over the same time last year.

But the underlying business, saw anoperating loss of $19m, compared with profits of $230m a year earlier.

The company's revenues were down 5% year on year, to $27.1m.

Improved competitiveness

David MacLennan, Cargill's chairman and chief executive officer, ascribed the rising profits to increased earnings from the company's food business, and changes in the company's portfolio.

Cargill made more than $3bn of new purchases, and nearly $2.4bn in divestitures.

"These moves are making us more competitive in sectors where we intend to lead," Mr MacLennan.

Cargill reported rising earnings across its foods business, which includes edible oils, starches and sweeteners.

Earnings were also up in Cargill's feed and protein business.

Low volatility

But the company is struggling with what it terms "mixed results" from its trading activities.

Mr MacLennan ascribed the weaker returns to "low volatility in agricultural commodity markets for most of the fiscal year".

"Stalled growth in several emerging economies also affected earnings," he said.

Falling earnings from trading

"Full-year earnings in origination and processing decreased significantly from a year ago," Cargill said, citing "trading and timing effects in oilseed processing".

"Three years of good weather in major growing regions and sluggish global demand led to large stocks, weak prices and low volatility, all of which limited trading opportunities," Cargill said.

But segment performance in South America and China "continued strong," Cargill said.

Cargill's industrial and financial services segment recorded losses for both the three month period and the full year, which the company said was "largely due to a fourth-quarter adjustment taken for counterparty risk in ocean shipping".


Twitter Linkedin
Related Stories

Festive staff shortages 'likely' as British growers cut ties with UK supermarkets

Faced with mounting concerns over labour shortages and fears they may not be able to fulfil retailer contracts, some British growers have sought to cut ties with UK supermarkets in favour of companies elsewhere in Europe.

Hard Brexit to have 'catastrophic' effect on European meat industry; new report

A hard Brexit will have a ‘catastrophic impact’ on the European meat industry, according to a report published by Europe’s meat industry body, UECBV, as the UK and EU continue negotiations.

Manufacturers stockpile agrochemicals in bid to keep post-Brexit prices down for farmers

Manufacturers of crop protection products are stockpiling agrochemicals in warehouses in a bid to keep input costs down for farmers after Brexit, according to the chief executive of the Crop Protection Association, Sarah Mukherjee.

Dairy groups sidestep shockwaves from GDT price slump

Indeed, shares in the likes of A2 and Beston soar. Still, that does not mean there are no losers from the dairy price falls...
Home | About | RSS | Commodities | Companies | Markets | Legal disclaimer | Privacy policy | Contact

Our Brands: Comtell | Feedinfo | FGInsight

© 2017 and Agrimoney are trademarks of Agrimoney Ltd
Agrimoney is part of the Briefing Media group
Agrimoney Ltd is registered in England & Wales. Registered number: 09239069