Increased purchases of pulses from India and Turkey during a non-traditional period have helped boost earnings at Alliance Grain Traders, says the president and CEO of Alliance Grain Trader.
On Monday, the company announced revenue of $246.7 million for the second quarter of 2013 — a period ending in June — up 22 percent from the same period in 2012.
Purchases following the Indian harvest in March and April and before the May-June harvest in Turkey indicate supplies are short, said Murad Al-Katib, during a conference call.
“North America, Canada in particular, has been in a good position to supply these markets in advance of new crop supply from the surplus stocks being carried in from past harvests,” he said. “The higher than expected import volumes in the period appears to have acted as a demand catalyst for the sector overall.”
Read Also
Feed Grains Weekly: Price likely to keep stepping back
As the harvest in southern Alberta presses on, a broker said that is one of the factors pulling feed prices lower in the region. Darcy Haley, vice-president of Ag Value Brokers in Lethbridge, added that lower cattle numbers in feedlots, plentiful amounts of grass for cattle to graze and a lacklustre export market also weighed on feed prices.
Alliance Grain Traders is a Saskatchewan-based pulse and special crop processor and exporter with facilities in the U.S., Turkey, China, Australia and South Africa.
For the second quarter of 2013, the company reported earnings before interest, taxes, depreciation and moralization of $13.9 million. Net earnings were $4.9 million.
Al-Katib said the results indicate “ongoing normalization” of pulse markets and a realignment of supply and demand.
He said the outlook for the Saskatchewan harvest is positive.
“We expect new crop product to begin delivering to our facilities within the next few weeks. Harvest is expected with good quality and ample quality to continue our sales programs in the upcoming traditional shipment periods,” he said.
The first production line at AGT’s new food ingredient production facility in Minot, North Dakota, has begun operations. The new facility will produce pulse proteins, fibres, starches and flours for food, feed and pet food. Two additional lines could be in operation by 2014.
“I can tell you with a fair amount of confidence, this will be the focus of our global growth strategy,” said Al-Katib.
“The food ingredient segment is the natural extension of using the platform that we spent the last decade building. I think a very important element of this strategy is to recognize this is not something new. This is what we built the platform for in the first place.”
The new facility could generate revenues of $75 million per year once all three lines are running, with improved margins compared to the company’s existing facilities.
“It’s going to be susceptible to different risk factors than our current business, which is currency sensitive. It is liquidity sensitive …” said Al-Katib.
“I like the fact that North America, western Europe and certain Asian markets, their demand for these ingredients is not tied to whether India or Turkey has good crops. We like that.”
