January 13, 2011

Cargill's fortunes rise at crop price rally

Cargill, the world's largest agricultural commodities trader, has jumped in earnings by improving its supply to importers left in the lurch by dismal crops at major crop exporting countries.

Excluding the contribution from Mosaic, the fertiliser giant that Cargill controls, earnings near-doubled to US$832 million - a performance Greg Page, the group chairman and chief executive, said reflected "strong results across the breadth " of the company.

"The diversity and balance built into the mix provides the company with a great deal of resilience," he said.

However, results were particularly strong in the origination and processing division, whose functions include sourcing and distributing grains and oilseeds, after it "developed an early and accurate read" on the weather setbacks in the June-to-August period, and their implications on trade.

That period witnessed the revelation of a string of crop setbacks, including persistent rains in western Canada which left an estimated 10.5 million acres of farmland not seeded, and the drought in Russia, which forcing one of the world's top wheat shippers to drop exports.

The division's call "enabled the segment to serve import-dependent customers with grain rerouted from alternate origins, while handling substantial volatility across agricultural commodity markets", Cargill said.

Separately, France, Europe's top wheat grower, on Wednesday (Jan 12) lifted its forecast for shipments of the grain to a record 11.8 million tonnes, after winning a string of deals from importers, largely in North Africa, which had been served by the Black Sea exporters.

Cargill also highlighted better profits at its agricultural services division, lifted by grain handling volumes swollen by historically large US crops.

But results in food ingredients operations were "mixed", sapped by the higher costs of raw materials.