Diversification can pay | Agweb.com

In the immortal words of B.B. King, “Whoa nobody loves me, nobody seems to care, Well worries and trouble darling, babe you know I have had my share.” This would appear to be the tune on the minds of bulls in the grain and soy markets as they struggle with a mean case of the harvest “blues.”   Outside of an export sales release of 132,000 MT of beans to China this morning, there would appear to be little to lift the spirits in these markets as the harvest pace quickens and the only other item on the horizon being a stocks reports at the end of this week.  Now, all that said, these markets have not ventured into new territory, nor do I suspect they will, but the prospect for more of the same dull sideways patterns for the foreseeable future is enough even to make a bluesman sad.

While I am not sure if it will actually lift any spirits, at least we (speaking for most or us) are not Syngenta.  As you have most likely read or heard, they have agreed to settle the farmer lawsuits concerning the release of a strain of GMO corn that had not been approved by China, and it is estimated that the payments would reach upwards of $1.5 billion.  I probably do not need to point out that there is a bit of irony in the fact that Syngenta is being purchased by ChemChina.  Do recognize as well that this settlement does not include the separate lawsuits filed by ADM and Cargill nor suits brought by Canadian farmers.   This is not just the blues; this would appear to have ventured into black and blue.    

All the news was not negative in the Ag realm this morning though as Cargill has reported quarterly earnings that were up 14% over last year.  The results though would seem to be a living testimony to diversification within a business model as the improved returns were a result of strength in the animal nutrition and protein division, specifically the cattle trade.  The official line was results “were lifted by brisk consumer demand for beef, strong exports, and abundant cattle supplies, resulting in better utilization of processing capacity.” If I am reading that correctly it says, we were able to slaughter and sell a lot of cattle this past quarter. While the release that I read this morning did not include the breakdown, it did mention that the strong performance from the beef division was partially offset by weaker results in grain trading.  As noted previously, grain companies that are less diversified such as Bunge, have truly struggled…

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