Global supplies of key crop staples will remain tight for at least two years after harvest shortfalls in some countries and shipping disruptions triggered by Russia's invasion of Ukraine, ADM reported on Tuesday.
Demand will likely outpace supplies until at least 2024, resulting in high crop prices that will draw grain stocks out of storage and encourage South American farmers to plant more, the grains merchant said after posting a better-than-expected quarterly profit, reports Reuters.
“Looking forward, we expect reduced crop supplies — caused by the weak Canadian canola crop, the short South American crops, and now the disruptions in the Black Sea region — to drive continued tightness in global grain markets for the next few years," said Chairman and CEO Juan Luciano.
"Longer term, markets continue to reflect the importance of the enduring global trends that are fueling performance across our portfolio by driving demand for our products."
In its first quarter earnings report for 2022, net earnings attributable to ADM jumped 53% to $1.05 billion, or $1.86 per share, in the quarter ended March 31, from a year ago.
“Our first quarter financial results, including adjusted earnings per share of $1.90, reflect an extension and amplification of the factors that drove our 2021 performance: great execution by our team, including exceptional growth in nutrition and effective risk management; a tighter supply environment, especially with the smaller South American crop; and robust and resilient demand," said Luciano.
"Importantly, I’m also very appreciative of how our company has rallied to support our colleagues in Ukraine and the country’s agriculture industry.
"Our productivity and innovation efforts are continuing to help us deliver on evolving needs of our customers," added Luciano. "Considering these factors, we expect 2022 results to exceed 2021's.”
