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DuPont sees corn sowings to rise in Brazil and US

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Corn sowings are set to rise, at the expense of soybeans, the chemical and agricultural company DuPont said.

"As farmers look to relative economics between crop alternatives, we expect a slight year-over-year uptick in Brazil safrinha and North America corn area, provided weather cooperates during planting," said DuPont.

The safrinha is the Brazilian second crop corn harvest, which is planted from February.

"Our order book in North America suggests a modest improvement in corn demand at the expense of soybeans in a highly competitive seed market," DuPont added.

DuPont said that "markets remain challenging," and said that action was being take to "streamline" its cost structure.

Row crop returns fall

Farmer returns for row crops have continued to fall since the start of 2016, and the sector will "remain challenged," DuPont said.

The company saw commodity prices "at the low end of normal until demand accelerates or there is a disruption in global production".

Volatile currency markets will also "present headwinds," to DuPont, which does a large amount of business in non-dollar markets.

Earnings to weaken

DuPont expects sales and earnings for its agriculture segment to be lower in 2016, as falling volumes and overseas currencies outpace local-currency prices.

"We expect first quarter sales to be about ten percent lower and operating earnings in the low-twenty percent range below 2015," DuPont said.

The outlook came as DuPont reported slower sales in the three months to February 2015.

Agriculture business runs at a loss

"Continued challenging conditions in agriculture markets were compounded by strong currency headwinds, particularly from a weaker Brazilian real," DuPont said.

DuPont's fourth quarter agriculture sales are driven by South American demand, as the summer planting season begins.

Although prices in local markets were up 6%, the currency weakness in South America meant sales were down 11% in dollar terms.

Crop protections sales were down 24%, thanks to the "challenging macro environment," as well as the adoption of insect-resistant soybean varieties.

But DuPont's seed sales were up 2%, as a shift in seasonal timing in Brazil pushed purchases back into the last quarter.

Overall, the segment made an operating loss of $54m. Segment sales were down 13% over the full year, with earnings down 30%.

Merger ahead

Over its full business, DuPont said it was looking to cut costs by $730m in 2016, ahead of a merger that will result in the agriculture segment being combined with that of DuPont, and spun out into an independent entity.

DuPont forecast 2016 operating earnings across its business at $2.95-3.10 a share, compared with analysts' estimates of $3.10 per share.

In the three months to December 31, DuPont reported a net loss of $253m, compar3ed to a profit of $683m a year earlier.

Excluding restructuring, operating profits over the period were 27 cents a share, slightly above analyst expectations of 26 cents a share.

Sales were reported down 9.4% year-on-year, at $5.3bn.

By William Clarke

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