July 30, 2012

 

 

Prompted by soaring crop prices as the company unveiled earnings ahead of expectations for the first half of the year, Syngenta revealed a drive to exploit the huge sowings forecast in Latin America.

 

Mike Mack, the Syngenta chief executive, said that after a "strong" performance in the northern hemisphere in the January-June period, "the focus is now Latin America, where the outlook is positive, given record soy prices".

 

A range of analysts have made large forecasts for South American soy crops to be planted later in 2012 and harvested in 2013.

 

Macquarie on Tuesday (July 24) forecast a rise of two million hectares to 27 million hectares in Brazilian soy sowings, and a jump of 16 million tonnes to a record 81 million tonnes in output, while last week Safras e Mercado pegged the crop at 82.3 million tonnes, on an area of 27.2 million hectares. Agroconsult has pegged Brazil's soy harvest at 83.1 million tonnes.

 

Syngenta is "looking forward to a big second half down there in Latam", Mack said. The comments came as the group unveiled first-half earnings up 5.1% at US$1.5 billion, on revenues up 7.3% at US$8.27 billion, a performance which reflected the range of dynamics in grain and oilseed markets.

 

In Europe and the former Soviet Union, the group exploited "increased planting of spring crops following winterkill on more than seven million hectares of cereals", besides the structural shift in Ukraine to planting corn.

 

"Former Soviet Union [operations] in particular continued to perform strongly, with the on-going intensification of agriculture and a share increase in corn herbicide usage in Ukraine," Syngenta said.

 

In South America, the group tapped hefty sowings of winter corn, planted as a follow-on crop to soy, and which is set for record output, boosted by the late start to the dry season - a delay which has set back sugar cane and coffee harvests.

 

And the group took a sanguine view of the impact of the US drought, whose threat to crops has only kicked in over the last six weeks, saying that, for growers, price increases were "taking the sting" out of yield losses.

 

The group also flagged the performance of its AgrisureArtesian brand of corn seed in withstanding the moisture shortage, which it said had left farmers' wells with 25% of the reserves they had a decade ago, and with costs higher of pumping the water to fields.

 

The data was well received by investors, who had forecast Syngenta reporting a net profit of US$1.41 billion, on sales of US$8.22 billion.