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KWS beats EU rapeseed stagnation, but falls short in South American corn, soybeans

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Seeds group KWS Saat in rapeseed rose above a flat sowing season in the key European Union market, but lost ground in South America, where its corn and soybean sales fell against a trend of area growth.


German-based KWS reported “good winter rapeseed business in Europe”, reporting a 15% rise in seed sales for the July-to-September period in what is the top producing region.


The growth comes against a backdrop of market expectations of EU rapeseed sowings this year coming in in line with last season’s 6.7m hectares, and with nearly all of the crop winter planted.


KWS reported “positive” sales too in winter cereal seeds, particularly in rye, in which “business went well in Germany and Poland”, with sales achieving “double-digit growth rates in both countries”.


Germany and Poland are by far the EU’s the biggest growers of rye, accounting for more than 70% of the 2m hectares or so of the grain planted in the bloc per year.


Corn, soybean shortfall


However, in the key South American seeds market, KWS reported a drop in takings, saying that its sales of corn and soybeans “did not quite reach the very good levels of the previous year and declined slightly”.


Depreciation in the Argentine peso also dented the group’s takings, in euro terms, in the region.


The sales drop comes despite growth in corn and soybean sowings in Argentina and Brazil, by far the region’s biggest producers of the oilseed.


Combined area of the two crops in Argentina and Brazil will grow by 2.9% for 2017-18 to nearly 77m hectares, according to the US Department of Agriculture.


Deeper in the red


KWS reported sales of sugar beet “slightly down year on year” too, at E10.3m for the July-to-September period, a drop of 19.5% year on year.


However, this was for a period reliant largely on takings in the likes of Chile and east Asia, rather than the key EU market, where sugar beet is being harvested.


Indeed, reporting a 10.6% widening in losses to E38.5m for the quarter, on revenues up 2.0% at E136.0m, KWS underlined that the period was a seasonally weak one for trade, accounting typically for 10-15% of annual group sales.


The group stood by expectations of a “slight increase” in sales for its 2017-18 financial year, which ends in June next year, and of a double-digit margin, although one below the 12.2% achieved last year.


KWS shares eased 1.3% to E348.55 in morning deals in Frankfurt.

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