Agribusiness major Archer Daniels Midland said Monday that flooding across the US that has destroyed grain and oilseed stocks and swept away silos will reduce its pre-tax operating profit by up to $60 million this quarter.
The company – the ‘A’ in the so-called ABCD quartet of companies that dominate agribusiness alongside Bunge, Cargill and Louis Dreyfus – said the bulk of the hit would be shared equally between its carbohydrate solutions and origination businesses, which include corn trading and ethanol production.
“Rail transportation has been disrupted throughout the region; our corn processing complex in Columbus, Nebraska, was idled due to flooding and currently is running at reduced rates; and unfavourable river conditions since December are severely limiting barge transportation movements and port activities,” ADM said in a statement.
The US Midwest has suffered a severe winter as record-breaking cold weather that has hit corn processing volumes due to a slowdown in rail and truck transportation.
And earlier this month, heavy rains have meant widespread flooding across major corn and soybean growing areas and shut 10-17% of ethanol production capacity, according to various estimates.
“Taken together, we expect these severe weather disruptions to have a negative pre-tax operating profit impact to ADM of $50 million to $60 million for the first quarter,” the company said.
Q1 operating profit for the carbohydrate solutions and origination business was $213 million and $45 million, respectively.
ADM is the first major agribusiness to outline the financial damage the floods will have.
Earlier on Monday, the USDA said it was assisting farmers in Iowa and other communities affected by the flooding.
The floods will likely hit corn plantings and boost soybean plantings, some analysts say.
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