May 2, 2012

ADM worries on low US soy supplies due to corn shift

Due to a shift toward corn plantings, Archer Daniels Midland Co. (ADM) is "very concerned" about the editing by potential for low US soy supplies, said Craig Huss, chief risk officer.

Farmers are expected to increase corn plantings to a 75-year high this spring to take advantage of high prices, and to plant fewer acres of soy than last year, according to US government estimates.

"We're very concerned about it," Huss said on a conference call with analysts in response to a question about the impact large corn plantings will have on soy supplies.

Later in the call, which followed ADM's third quarter earnings announcement, he added that it will be "difficult to buy beans going forward."

Decatur, Illinois-based ADM, one of the world's largest grain traders and processors, is one of four large players that dominate business in agricultural markets. The others are Bunge Ltd, Cargill Inc and Louis Dreyfus.

Soys are in the spotlight as futures prices have climbed to their highest price in nearly four years on worries about tightening global supplies. South America's soy harvest has suffered due to a drought, increasing demand for US soy.

The rally in prices has likely convinced some US farmers to plant acres with soy that they had previously intended to plant with corn, Huss said on the call. That would benefit soy supplies.

Farmers also may plant more acres than usual of so-called "double crop" soys, which are planted after winter wheat is harvested in the late spring, Huss said.

"We could see another potentially million acres of beans come back to us there," he said.

The US is the world's top producer of corn and soy.