ADM sounds bullish note for US grain export prospects

04.08.2016

Grain giant ADM expects US grain exports to rise rapidly over the next six months, thanks higher global demand.

"The outlook for US exports is much better," said Juan Luciano, chief executive at ADM, speaking to analysts.

"Demand continues to be strong and the US is competitive now for the future months."

The stabilising of the US dollar, lower than expected supplies from South America, and a big US crop are all expected to boost shipments from the US, which will increase revenues for the group's Agricultural Services segment, ADM said.

US prospects turn positive

Ray Young, ADM's Chief financial officer, told analysts that "several variables that have moved in our favour," with good demand prospects for the US crop.

The stabilising value of the dollar, after last year's rapid increase, has eased pressure on US exports, he noted.

"In fact, you've seen that relative to other crop growing regions, the dollar has actually become a lot more competitive".

South American competition stumbles

And Mr Young pointed out that concerns about a flood of grains and soybean products from Argentina, which removed export tariffs at the start of the year, have fallen back.

"What we've seen this year is in fact due to some weather issues down in Argentina and Brazil, this overhang doesn't exist."

"In fact, a lot of the surplus corn and wheat that was in Argentina actually moved to the world markets already and hence, you don't have the Argentine overhang and that's going to be favourable in terms of how US exports are going to look like," he said.

And global demand "remains very, very strong," Mr Young said, with the shortfall in South America keeping balances relatively tight, and increasing demand for US crops.


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