Agri Business giant, Archer Daniels Midland Co, shares tumbled reportedly due to the harsh U.S. winter weather.
Illinois-based ADM became the latest major agricultural trading house following Cargill Inc to detail how weather related rail problems contributed to a 28 percent drop in earnings. Analysts also expect the rail backlog will also impact Bunge Ltd's earnings, due out later this week.
|Winter (Photo credit: @Doug88888)|
These transport disturbances, which slowed grain shipments, came at a particularly bad time for the U.S. agriculture industry because traders were scrambling to transport crops from massive autumn harvests to buyers overseas. As the backlogs ease, importers will increasingly be making purchases from South America, which is harvesting fresh crops.
On the New York Stock Exchange ADM was down 2.7 percent at $43.15 per share, hitting its lowest price since March 26.
"With the farmer not selling and the basis not breaking and the weather getting in the way, I think that was the combination," ADM President Juan Luciano told analysts on a conference call.
ADM needs another large U.S. corn harvest to realize the full potential of its agricultural services division, which includes grain merchandising and handling, Luciano said. Farmers were behind their usual corn planting pace as of Sunday.
"If the corn crop and soybean crop are just getting planted, there's a long way to go," said Ari Gendason, managing principal for investment firm Arlon Group.
ADM earlier signaled it was attempting to refocus on grain trading by selling its fertilizer operations in South America, seeking a buyer for its chocolate business and taking full ownership of grain trader Alfred C. Toepfer International, analysts said.
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