USA- Minnesota-based Agri commodity trader Ceres Global Ag Corp released its third quarter results, revealing marginal losses that resulted from market volatility and extreme weather due to the La Niña phenomenon.
According to the results, Ceres sustained a loss of US$553,000 in the third quarter ended March 31.
Additionally, the adjusted net income totaled US$410,000, down from US$2.46 million in the same period a year ago, while net revenue totaled US$287.91 million, up 6.8% from US$269.63 million a year ago.
Ceres has been sustaining similar losses for a while now, and for the nine months that ended March 31, Ceres suffered a loss of US$5.41 million.
On the other hand, adjusted net income was US$1.37 million, compared with US$16.8 million in a similar period in the previous financial year.
Nevertheless, the net revenue totaled US$831.05 million in the third quarter, up 6.1% from US$782.79 million.
During the third quarter, Ceres completed the sale of its Port Colborne facility for US$4 million, gaining US$1.2 million in the process.
“This quarter, the business operations performed very well despite continued market volatility,” Carlos Esteban Paz, president, and chief executive officer, said during a May 12 conference call with investment analysts.
The company provided that its operations were negatively affected by the war in Ukraine, which led to supply chain disruptions and market volatility.
“February 24 marked the one-year anniversary of the conflict in Ukraine, a conflict that has had many humanitarian and economic impacts. For agricultural markets, particularly for Ceres, for northern spring wheat, durum, and canola markets, the war has disrupted production and exports, causing supply uncertainty,” Esteban Paz added.
Moreover, extreme weather due to the La Niña phenomenon affected global crop production and, therefore, trading activities around grains.
“While Brazil yielded record soybean crops, Argentinean bean, corn, and wheat crops were devastated by droughts, resulting in an extended US export season that kept rail freight values elevated. Continued dryness in the Western US Plains is also expected to impact the already small Kansas wheat crop,” CEO Paz revealed.
However, despite the unfavorable macro conditions, Paz said Ceres was able to effectively utilize its asset network to handle 20% higher volumes compared with the same period a year ago, crediting the performance of Berthold Farmers Elevator, LLC (BFE), with some of the success.
Ceres’ wholly owned subsidiary, Riverland Ag Corp., purchased Columbia Grain International’s 50% membership interest in Berthold last summer.
“The venture continues to exceed our expectations,” he said. “Volumes handled at BFE increased by 15% compared to last year. As being incorporated into our network of assets, this joint venture has continued to create synergies that provide long-term value for the corporation.”
According to Paz, in the company’s seed and processing segment, soybean crush volumes were higher than in the same quarter a year ago. These results reflected improvements in operational efficiency and effective merchandising.
“While demand for soy oil was low this quarter due to operational issues across the US renewable diesel refineries, the high demand for soybean meal more than made up for the shortfall in oil, resulting in solid margins,” he said.