Posted 11/7/2018 09:17 (#7090566) Subject: At least someone is making money on beans
South Central Wi.
ADM Q3 profits surge on ‘exceptional’ soybean processing
US grain merchant Archer Daniels Midland saw its profits surge as it processed a record volume of soybean during the quarter ending September 30, taking advantage of the strong US crush margins and selling its US produce outside the staple China market, the company said in an earnings release Tuesday.
The figures come a week after Bunge said its crush margins fired the company's earnings significantly higher.
ADM processed a record of 9.18 million mt of soybeans during its third quarter, up 1.1% from Q2 and up 11% from Q3 2017, and puts the running total this year at 27.3 million mt.
That boosted net profits to $536 million during the quarter, up from $192 million achieved in the third quarter last year.
The company expects to process even more beans in its fourth quarter, as seasonally expected, but the quarterly rise will be less than other years “because of this exceptionally strong third quarter,” Juan Ricardo Luciano, ADM’s CEO & President, said in an investors call.
China clock ticking
ADM, part of the ABCD quartet of the world’s biggest agricultural traders, was able to sell US products to countries other than China after soybeans came in the crosshairs of an ongoing trade war between the US, and its largest soybean buyer, China.
As part of the tit-for-tat trade war, China hiked import tariffs on US beans by 25% in July and its crushers have been avoiding US beans ever since.
“Even if there is no trade resolution in 2019, we will have the ability to export from the US as our products will continue to be more competitive globally,” Ray Guy Young, Executive VP & CFO, said during the call.
However, when asked if China will have to come to the US to buy beans before Brazil’s new crop comes to market, the CEO said that “the window is getting shorter, and China is finding ways to find supply elsewhere”.
“It may not happen at all. The early harvest in Brazil may allow them not to touch US beans,” Luciano said.
“There will be strong demand for US products, even with the ongoing trade war, the rest of the world is coming to the US for products,” Young said.
The company added that it expects US wheat to become more competitive globally in the new year as supplies from other major exporters, such as Russia, dry up, while other larger producers, such as the EU and Australia, have seen output fall due to unfavourable weather.
The company processed some 5.6 million mt of corn in the quarter ended September 30, in line with the strong two previous quarters, and up 2.4% on the year, despite an “extremely weak ethanol industry margin environment,” the company said in a statement.
“This year was pretty bad in ethanol, but the price is so low as an octane booster, that you could expect more demand next year,” Luciano said.