Cargill profit dips 28% after trading loss

Farm Forum

Cargill’s fiscal third-quarter earnings fell 28 percent as the company was hit by a major loss in power trading coupled with negative developments in Chinese corn shipments and disruptions in U.S. rail service.

On April 8 Minnetonka-based Cargill, one of the world’s largest privately-held companies, reported net earnings of $319 million for the three months ending Feb. 28, compared to $445 million in the same period a year ago. Third-quarter revenues were $32 billion, essentially even with a year ago.

Cargill, whose holdings run from road salt to sugar trading, saw operational improvements in key businesses. However, “external events effected our quarterly results,” CEO David MacLennan said in a statement.

The company’s earnings were partly trimmed by a trading loss “related to an unprecedented price spike in U.S. power markets in late January,” MacLennan said. Part of that loss has been recovered, the company said.

A power markets publication, SparkSpread, reported in January that Cargill lost at least $100 million in trading in U.S. power markets. Cargill has disputed that report.

Cargill also said that the rejection of certain corn shipments to China also crimped profits. The Chinese government has recently banned the import of corn varieties produced with certain genetically-engineered traits.

To top it off, Cargill said weather-related slowdowns of train service in this country also hurt earnings. Grain farmers through much of the Midwest have had to deal with bottlenecks this winter due to weather and demand for trains by oil producers in North Dakota.