October 30, 2014

Bunge posted lower than expected earnings for the July – September quarter reflecting a 43% drop to $186 million in operating profits originating from its agribusiness arm which accounts for more than 70% of the group’s revenue.  The group is flagging very slow farmer selling in South America as being behind the slump.  Argentinian farmers are still hoarding soybeans as a hedge against economic instability, soaring inflation, and the country’s depreciating currency, however, Bunge is also seeing extremely low selling from farmers in Brazil.  Farmers in Mato Grosso, Brazil’s top soybean producing state, have sold only 16% of their upcoming harvest compared to 41.4% last year at this time, causing Bunge to suggest that the re-election of Dilma Rousseff may cause grain hoarding in Brazil as well as Argentina.  The findings are also leading grain traders to question Brazil’s reliability as a grain supplier.  Looking forward, Bunge is forecasting a positive outlook for the October through December quarter on large crops in the Northern Hemisphere and strong demand from the livestock sector allowing for high run rates and good margins.  Bunge is also predicting a strong year for its food and ingredients division and breakeven results for its sugar division.

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