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Cargill Profits Surge

Mike

Well-known member
Cargill profit surges on higher demand
Growth in worldwide demand for corn and soybeans more than made up for higher costs.

By Daniel J. Goldstein, Bloomberg News

Last update: October 15, 2007 – 7:56 PM
Cargill Inc., the largest U.S. agricultural company, said Monday that fiscal first-quarter profit rose 83 percent as the company processed more soybeans and corn and successfully hedged higher grain costs.
Net income climbed to $917 million for the three months ended Aug. 31, compared with $500 million in the same period a year earlier, Minnetonka-based Cargill said. The privately held company didn't disclose sales.

Cargill benefited from soaring worldwide demand for soybeans, corn and other agricultural products, more than making up for surging commodity costs and volatile credit markets. Corn prices were 49 percent higher in the quarter than a year earlier, wheat was up 67 percent and soybeans rose 41 percent.

"Cargill was able to handle the volatility," said Anil Passi, an analyst with Dominion Bond Rating Service in Toronto who follows Cargill's $9.9 billion in bonds.

The company's food ingredients business "also outperformed" last year's first-quarter earnings, Cargill said. Results from meat processing "were about the same," spokeswoman Lisa Clemens said. Cargill owns Cargill Meat Solutions, the second-largest U.S. beef processor behind Tyson Foods Inc.

'Market volatility'

"June through August was an extraordinary period with growing demand for agricultural commodities against tightening supplies," Chief Executive Greg Page said in the statement. "All of this sparked a new level of market volatility."

Global consumption of soybeans will reach a record this year, the U.S. Department of Agriculture (USDA) said last week. Use was pegged at 233.3 million metric tons in the marketing year that began Oct. 1, up 4.4 percent from 223.5 million in the previous year.

Corn use will jump 5.3 percent to 763.7 million tons, the USDA said. Corn is used to make sweeteners and ethanol as well as animal feed. Cargill is the second-biggest maker of high-fructose corn syrup, behind Archer Daniels Midland Co.

The company's ethanol and biodiesel operations made a "modest" contribution to earnings, Clemens said. Ethanol and biodiesel account for about 5 percent of net income, she said earlier this year. Cargill operates ethanol distilleries in Blair, Neb., and Eddyville, Iowa.

Results for the quarter were the first full period under the stewardship of the Page, who succeeded Warren Staley in June. Page, 56, had been chief operating officer since 2000.

The company has 158,000 employees in 66 countries.
 
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