CHICAGO (Reuters) — Cargill Inc., a top global commodities trader, said on Tuesday its quarterly earnings fell 28 percent due to a trading loss in U.S. power markets, China’s rejection of U.S. corn shipments, and rail disruptions.
Minneapolis-based Cargill reported net earnings of $319 million for the third quarter ended Feb. 28, down from $445 million a year earlier. Revenue was $32 billion, nearly even with a year earlier.
The trading loss in energy was related to an “unprecedented price spike” in U.S. power markets in late January, according to Cargill. Part of the loss has been recovered, the company said.
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In February, Cargill was reported to have lost $100 million-plus in U.S. energy markets due to a wrong-way trade during a bitter cold snap at the start of this year. Cargill’s head of physical trading at its North American thermal energy arm left the company that month.
Cargill’s focus historically has been on grains and agricultural markets, rather than energy. The company is the “C” of the so-called ABCD firms that dominate agricultural commodities. The others are Archer Daniels Midland, Bunge and Louis Dreyfus Corp.
Cargill said last month it would stop trading coal and dealing in gas and power in Europe, becoming the first traditional commodities trading company to step away from a sector hard-hit by falling margins.
In agricultural markets, China has been rejecting shipments of U.S. corn since November due to the presence of an unapproved genetically modified variety, hitting Cargill and other exporters with unexpected costs.
Cargill, the top exporter of U.S. grains, said there were generally “limited opportunities in grain trading and storage” during the quarter.
The company said weather-related disruptions to rail service in North America also hurt earnings.
