05 February 2013 16:45 [Source: ICIS news]
HOUSTON (ICIS)--Archer Daniels Midland (ADM) expects to take advantage of consolidation in the fragmented ?xml:namespace>
ADM chief operating officer Juan Luciano said that the consolidation process in the industry has started and that ADM will be looking at buying production units that could enhance its already “very good footprint”.
Luciano was briefing analysts on ADM’s results for the three months ended 31 December, when the company saw negative margins in the ethanol business.
The margin pressure was the result of overcapacities and weak demand, rather than difficulties in the sourcing of corn or corn prices, he said.
However, gasoline consumption was declining, to “maybe now to the point of 130bn gal/year, and that is the issue that we have”, he said.
ADM, for its part, believes that ethanol margins “probably touched the bottom in the last quarter” and should improve, given reductions in US ethanol industry capacities.
Also, exports could be a near-term solution for US producers, Luciano said, pointing to Brazil's move to raise blending rates.
From 2014, the ethanol business should see benefits from E-15 blending in the US, he added.
Earlier on Tuesday, ADM reported improved second-quarter net earnings on the back of higher profits in its oilseeds processing segment.
Additional reporting by Franco Capaldo.
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