ADM profit jumps as big U.S. harvest boosts ag services
CHICAGO, Ill. (Reuters) — Archer Daniels Midland Co. has reported higher quarterly earnings as a record-large U.S. harvest boosted grain volumes and supported strong exports.
Earnings in agricultural services, which is ADM’s biggest business segment in terms of revenue, grew as bumper U.S. corn and soybean crops replenished thinned inventories of the crops that the company buys, sells, stores and processes.
Good oilseed crush margins in North America and Europe underpinned ADM’s soybean processing results, but that was offset by slow farmer sales in South America.
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Higher profits from ethanol underpinned corn processing results, although rising grain costs in the quarter partly offset the gains.
The company warned of headwinds from deteriorating ethanol margins this year.
ADM reported that net earnings of US$701 million in the quarter ended Dec. 31, up from $374 million a year earlier.
Revenue fell to $20.89 billion from $24.14 billion.
ADM-Glencore grain port venture to shuffle Brazil grain flows
CHICAGO, Ill. (Reuters) — Plans by commodities trading rivals Archer Daniels Midland Co. and Glencore to jointly develop an export terminal in northern Brazil promise to shift grain flows both within South America’s largest producer and to Asian importers.
ADM will give Glencore 50 percent of its Barcarena export terminal in Brazil’s Para state, which is the Swiss company’s first foray into Brazilian grain ports.
The companies plan to quadruple the facility’s annual capacity to six million tonnes, making it one of the country’s largest grain export terminals.
The two agricultural heavyweights hope to tap rising crop production in northern Brazil, eyeing the upcoming expansion of the Panama Canal for a more direct route to Asia, industry analysts said. Northern ports are also easier and cheaper for exports from northern Mato Grosso, Brazil’s top soybean state.
Brazil now exports most of its crops through southern ports such as Santos and Paranagua, which have become congested as a result. Investments in better roads in recent years have opened a path to northern ports.
Cargill begins selling GM Syngenta corn seed at centre of lawsuits
CHICAGO (Reuters) — Cargill Inc. has started selling a genetically modified Syngenta AG corn variety now that China has approved imports of the biotech crop.
The variety had previously disrupted U.S. grain trading with China.
Cargill began selling seed containing the Agrisure Viptera trait last month and scrapped a policy that required farmers to give the company prior notice of deliveries that may contain Viptera corn, spokesperson Mark Klein said.
It had previously sued Syngenta over the trait last year when China banned imports of the GM crop.
Cargill adjusted its policies after Syngenta provided written confirmation that Beijing had approved imports of Viptera corn, Klein said.
China began rejecting boatloads of U.S. crops containing Viptera corn in November 2013, spurring Cargill, ADM and dozens of farmers to sue Syngenta for damages.
David MacLennan, Cargill’s chief executive officer, said the rejections caused the company “a lot of financial damage.”
The U.S. National Grain and Feed Association estimated last April that rejections of shipments containing MIR 162 corn cost the U.S. agriculture industry at least $1 billion.
Syngenta has said lawsuits over Viptera corn are baseless.
Dow Chemical’s profit falls 24 percent
(Reuters) — Dow Chemical Co.’s quarterly profit fell 24 percent, hurt by a $500 million loss related to abandonment of a plant in Tennessee by a joint venture and other charges.
Net income available for the company’s shareholders fell to $734 million in the fourth quarter that ended Dec. 31 from $963 million a year earlier.
Net sales were almost unchanged at $14.38 billion.
Dow’s joint venture, Dow Corning, abandoned a polycrystalline silicon manufacturing plant in Tennessee.
Millions of poor farmers to benefit from new type of insurance
ROME, Italy (Thomson Reuters Foundation) — Governments from Mongolia to Nigeria are creating new forms of insurance to protect the developing world’s small farmers, who are especially suffering from extreme weather events made worse by global warming, a new study said.
Obstacles such as poor infrastructure and lack of financing have been partly overcome in several countries, and insurance is now available to millions of small farmers, said the study released by Columbia University and the research group Climate Change, Agriculture and Food Security.
More farmers are able to obtain coverage than before because of a switch to index insurance from traditional indemnity insurance, where the size of payouts is based on specific losses faced by a client.
The new index model allows farmers to buy insurance so they receive a payout if the amount of rainfall in a given period increases or decreases beyond acceptable levels, or if average crop yields in a certain region drop below an acceptable level.
It was not viable for traditional insurers to assess and cover many small farms with low margins because it was not worthwhile to investigate claims, the study said.
U.S. grain farmers eye long-term average price for farm bill sign-up
CHICAGO, Ill. (Reuters) — U.S. grain farmers are leaning toward a government farm subsidy based on long-term price averages rather than a fixed price as they lock in sign-ups for the new five-year federal farm bill.
Farm economists say that choice will pay off in the short term but hurt if low prices persist.
The price-average choice, called agricultural risk coverage (ARC-County), may draw more than four-fifths of grain producers in Iowa and Illinois, which together produce about a third of all U.S. corn and soybeans, experts say.
The other choice, called price loss coverage, is drawing interest from farmers who are more bearish on crop prices, such as growers of peanuts, canola and perhaps wheat, they say.
But Steven Johnson, an Iowa State University farm economist who has met with about 8,000 farmers in Iowa in the past 10 weeks, said the producers he has talked to are leaning overwhelmingly toward ARC-County.
“Potentially, 80 percent of all the base acres in Iowa will go ARC-County,” Johnson said.
“ARC-County corn payments on those first two years will likely be larger than what they potentially could collect on PLC over five years.”
The new federal farm bill spared no expense in government supports for grain farmers. Bumper harvests of the last two years have cut prices sharply after five years of record prices.
“I would anticipate Iowa corn farmers would collect somewhere in the neighbourhood of US$50 to $70 per base acre each for the first two years,” Johnson said.
“It’s the higher risk strategy but likely the higher reward strategy.”
