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

Syngenta's Latin America sales tumble, as farm spending squeezed

Twitter Linkedin

Syngenta underlined the difficulties facing agrichemicals groups in South American market as it unveiled a 4.2% drop in quarterly sales, in its first results statement since being bought by ChemChina.

Swiss-based Syngenta, which was bought by ChemChina last month for $43bn, revealed sales of $3.21bn for the April-to-June period, down from $3.35bn a year before, accelerating the pace of deterioration from the 0.9% seen in the previous quarter.

The group noted "cold weather and low disease pressure" which curtailed sales in its European, African and Middle Eastern division, although it added that "the impact of these conditions on crop protection volumes was partially offset by the successful launches of Solatenol," a fungicide, in Europe.

Divisional sales eased 0.6% to $939m.

In Asia, sales dropped 5.2% to $455m, undermined by "dry conditions in Australia", where spreading drought is raising concerns of a sub-20m-tonne wheat crop, besides by a chance of sales taxes in India which is seen as incentivising a switch in trade to the current quarter.

'Sales declined significantly'

However, the steepest drop in sales was in Latin America, where sales for the April-to-June quarter, at $482m, slumped by 25% year on year, undermined by a drop in farmer spending on agrichemicals, in the face of weaker crop prices, which has caught out peers too.

"Our Latin America sales declined significantly again as the industry faces low commodity prices," said Erik Fyrwald, the Syngenta chief executive, adding that the trend has resulted in "high inventories" in supply chains in Brazil.

The comments come less than a month after rival Bayer warned of a E300m-400m earnings hit from measures to curtail its own agrichemical stocks in Brazil, warning of an "unexpectedly high channel inventory level of crop protection products".

The shake-up is seeing Bayer, for instance, renegotiate a contract with crop enhancement group Plant Impact over supplies of a spray aimed at boosting soybean yields.

By contrast, the farm machinery sector, in which inventories appear to be less problematic, is thriving, with CNH Industrial, the maker of Case and New Holland equipment, on Wednesday reporting a "strong rebound in demand" in Latin America in the April-to-June period.

'Lower planted corn area'

On Tuesday, DuPont ag business head James Collins said that industry agrichemical stocks in Brazil were "still a little bit elevated", if adding that the group's own inventories were "kind of now back to where I would really like them to be, kind of normal".

He flagged the role of weaker corn prices in Brazil in particular in undermining grower demand.

"We are anticipating lower planted corn area in Brazil's summer season, coming off strong plantings and good yields in the previous summer season, and a sharp decline in domestic commodity prices," Mr Collins said.

"These dynamics are causing farmers in Brazil to delay purchase decisions until closer to planting as they scrutinise their cropping plants."

Brazilian corn prices as measured by research institution Cepea stood at R25.77 per 60- kilogramme bag on Tuesday – down 32% for 2017, and 46% from their level a year ago.

Prices have been pressured by recovery in the real, which cuts the value in Brazilian terms of assets traded internationally in dollars, besides by the return of the country to healthy supplies, after last year facing a squeeze prompted by a weak safrinha harvest, following on from an extensive export campaign.

By Mike Verdin

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