ADM stock rises, Bunge's drops as ag commodity giants report earnings

·2 min read

Stock prices for two major buyers of Iowa farmers' crops headed in different directions this week following their latest financial reports.

Chicago-based Archer-Daniels-Midland Co. reported an operating profit of $1.84 billion in its latest quarter on Tuesday, up 61% over the same period last year.

The company's agricultural services and oil seed businesses were the primary drivers of the increased earnings, which led to a 6% increase in ADM's stock price from Tuesday morning through Wednesday afternoon.

Bunge Limited, meanwhile, saw its stock price drop 5% Wednesday despite reporting that quarterly profits fell by 43% from last year, to $206 million.

The St. Louis-based agricultural services company blamed the drop on its merchandising business, which buys, dries, stores and transports corn, wheat and barley.

The reports came as the federal government seeks to bring down a decades-high inflation rate, which has raised food prices. Iowa is the nation's top corn-producing state and second for soybeans, and ADM is one of the top buyers of both in the Midwest. It turns the commodities into everything from starches to sweeteners to ethanol and biodiesel, as well as shipping them to other countries.

ADM operates factories in Cedar Rapids, Clinton and Des Moines.

"In recessions, food is more protected than other things," ADM CEO Juan Luciano told analysts on a call Tuesday morning. "So we don’t expect a significant drop in demand, at least not for a sustainable period of time."

Bunge CEO Greg Hackman told analysts Wednesday that the company continues to deal with tough conditions around the world, from COVID-19 lockdowns that have shut down factories in China to the war in Ukraine, where the company maintains a presence. The tight supply of grain in the U.S. has caused commodity prices to shift frequently, making it more difficult to nail down agreements.

"Producers (were) not selling any crops, as well as the consumer absolutely stopped buying, trying to see where the market sorted itself out," Hackman said.

The moon rises behind a grain elevator in Waukee.
The moon rises behind a grain elevator in Waukee.

The company also has dealt with supply-chain issues that have made it harder to move the corn and soybeans. Bunge estimated that Russia's invasion of Ukraine, a top corn grower, cost the company $59 million last quarter, which ended June 30. Hackman said the company will continue to struggle to move grain out of Ukraine, in part because of the damage to ports on the Black Sea.

Russia on July 23 signed an agreement to allow Ukraine to resume grain exports, then, hours later, hit the port city of Odessa with missiles.

Despite its setbacks, Bunge increased its forecast for the rest of the year, telling investors that it expects to earn $12 per share. The company previously reported that the company should earn $11.50 per share.

"We need a good U.S. crop," Hackman said. "But it looks like we're on the way there."

Tyler Jett covers jobs and the economy for the Des Moines Register. Reach him at tjett@registermedia.com, 515-284-8215, or on Twitter at @LetsJett.

This article originally appeared on Des Moines Register: Commodities buyers' shares on opposite arcs after earnings reports