The Atlanta Journal-Constitution
ADM making money in trade war
Agribusiness giant is finding soybean customers outside of China.
Archer-Daniels-Midland Co., the 116-year-old agribusiness giant, is shaping up as one of the few crop-trading houses to benefit from President Donald Trump’s trade war with China.
On Tuesday, the Chicago-based firm reported better-than-expected earnings for a fourth straight quarter, with soybean crushing the main driver of growth.
ADM also said it’s been able to find customers outside of China, especially for corn, after Beijing slapped a 25 percent tariff on U.S. soybeans earlier this year.
ADM is successfully navigating markets battered by both the trade war and droughts from Argentina to Russia.
Rival Bunge Ltd. cut its guidance for the year last week, while Louis Dreyfus Co. blamed a steep drop in first-half profit on a $65 million negative mark-to-market valuation of soy-crushing hedges.
Smaller traders are also struggling. On Monday, The Andersons Inc. posted a surprise loss in the third quarter as its grains unit was hurt by the drop in corn and soybean prices in the physical market due to the tit-for-tat tariffs spat.
Last week, Gavilon Group said it had suspended proprietary trading of agricultural commodities due to “lack of market oppor-
tunities.”
“In this environment, Archer has done a better job of executing,” Seth Gold- stein, an analyst at Morn- ingstar Inc. in Chicago, said prior to ADM’s earn- ings release.
Cargill is another of the beneficiaries of unpredictable crop markets, with the biggest closely held company in the U.S. boasting a sharp recovery in its trading business in the three months through August.
For ADM, adjusted earnings-per-share for the third quarter exceeded the highest estimate by analysts, while revenue was broadly in line. Its shares are up about 20 percent this year, the most among peers tracked by Bloomberg.
“In North America, the business managed risk well in a volatile price environ- ment and capitalized on its asset base to deliver higher volumes and margins, includ- ing strong export sales to customers in markets out- side of China,” it said .
ADM said its oilseeds unit set a record high for crush volume, while transportation results more than doubled from a year earlier.
In August Chief Executive Officer Juan Luciano touted the company’s expansive network of barges, rail cars, trucks, boats and ocean-going vessels, as weapons in the trade war.