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.
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| 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.
The Global Miller
This blog is maintained by The Global Miller staff and is supported by the magazine GFMT which is published by Perendale Publishers Limited.
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