Make Kitco Your Homepage

ADM projects strong, export-led profit in last half of 2020

Kitco News

CHICAGO (Reuters) - Agricultural commodities trader Archer Daniels Midland Co (ADM.N) expects a groundswell of export demand in the second half of 2020, led by robust purchases by China, as the coronavirus pandemic fuels food security concerns around the world, the company said Thursday.

Ample U.S. supplies of crops like soybeans, corn and wheat could help propel ADM to a record fourth-quarter profit, Chief Executive Juan Luciano said during a quarterly call with analysts.

After record export volumes from South American facilities helped ADM deliver a stronger-than-expected second-quarter profit, Brazilian soy stocks are nearly depleted, Luciano said. The United States will be the prime supplier to the world, he added.

“The U.S. export market is setting up ... for very good times on very solid global demand and competitive prices,” Luciano said.

“Potentially, we could have record profits in Q4 when you look at the volumes, plus the attractive prices, because we’re going to have a big harvest in the U.S.”

Global agribusinesses like ADM and rival Bunge Ltd (BG.N) are among the companies that have fared better than expected during the pandemic despite food supply chain disruptions and volatile markets.

Bunge raised its full-year outlook after reporting a stronger-than-expected quarterly profit on Wednesday following record Brazilian crop exports.

Both companies have reported minimal disruptions to operations due to COVID-19.

China has recently been actively buying U.S. soybeans and corn, including its largest ever single-day corn purchase reported on Thursday.

However, China will need significant buying for the remainder of the year to reach the $36.5 billion in purchases promised in its Phase 1 trade deal signed in January.

Luciano said China needs about 25-26 million tonnes of soybeans for the remainder of 2020, about half of which is already booked. The rest will be U.S. beans shipped in the fourth quarter, he said.

Reporting by Karl Plume in Chicago; Editing by Bernadette Baum

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.