27 October 2011 17:44 [Source: ICIS news]
HOUSTON (ICIS)--Bunge expects to benefit in 2012 from larger grain and sugar crops, which will boost grain processing and ethanol performance, the US-based agribusiness said on Thursday.
"High sugar and ethanol prices in Brazil and good farm economics around the world will drive improved results in the fourth quarter of 2011 and in 2012," Bunge chief executive Alberto Weisser said during an investor conference call.
Earlier on Thursday, Bunge reported that its third-quarter net income fell by 34% year on year to $140m (€101m) as it dealt with a "challenging" period for its agribusiness, sugar and bioenergy segments.
The group's sugar and bioenergy business unit saw an operating loss of $43m, while operating profit in the agribusiness division almost halved to $159m.
However, group sales rose to $15.6bn compared with the $11.7bn in the same period last year.
"Performance in our agribusiness operations in the northern hemisphere, which have been pressured recently by tight supplies, should benefit from the harvests which are currently underway, said Bunge chief financial officer Drew Burke.
"Global trade of grains remains solid, and we expect our grain merchandising business to perform well, though margins have decreased from levels seen in the first half of the year," Burke said.
Bunge expects that oilseed processing margins in the US should improve from the low levels seen in recent quarters as farmers commercialise new soybean production and its plants run at higher utilisation rates.
However, margins are likely to remain under pressure because of excess processing capacity and continued soybean supply out of South America.
Oilseed processing margins in China, which have been weak for most of the year, have recently improved and should remain supported by growth in meal demand, Burke said.
The US Department of Agriculture is forecasting 10% year on year demand growth for soybean meal in China.
Bunge said it expects to mill 17m–19m tonnes of sugarcane in 2012 with pricing supported by strong demand, tight ethanol supplies in Brazil and the need to encourage Brazilian capacity expansion.
"In edible oils, the tough competitive environment we have seen in Brazil is showing signs of improvement, and the harvest should ease the tight raw material supply situation in Europe," Burke said.
In fertilizers, South America is in the middle of its high-volume period and farm economics are strong, encouraging increased crop production and use of crop inputs, said Burke.
"North and South America and eastern Europe will see a big expansion in grain production and trade as demand rises around the world to feed growing populations, Weisser said.
($1 = €0.72)
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