High water in the Mississippi river basin brought on by abnormal rainfall this spring contributed to disappointing quarterly earnings at Archer Daniels Midlands, the global crop trader and processor.
The Chicago-based company reported net profit of $235m, or 42 cents a share, in the second quarter, less than half its earnings of $566m or $1 per share a year before. Analysts had forecast profits of 65 cents a share.
It was the lowest net income in a second quarter since 2013, according to S&P Capital IQ.
ADM is among the small group of international companies that lead international grain handling and processing, purchasing crops such as corn, wheat and soyabeans from farms for distribution or processing into products such as animal feed, biofuels and food ingredients.
Such companies rely heavily on river barges as the most economical way to move grain. ADM owns American River Transportation, a leading barge company that ships its own and third-party grain.
Rains far above average in the second quarter halted barge traffic on the Mississippi river this spring and disrupted movements elsewhere. The intense rainfall was consistent with recent changes in the climate across the US Midwest as the planet gets warmer.
ADM said both its merchandising and handling and transportation results were down year on year due to “continued high water conditions on US rivers,” contributing to a 63 per cent fall in adjusted operating profit in its origination division.
Adjusted profit at ADM’s oilseeds division fell by 15 per cent, in part due to “production outages caused by high water” at the company’s soyabean crushing plant in Quincy, Illinois, which sits beside the Mississippi river.
Rain and floods also hit ADM’s results in the first quarter, when they inundated railroad lines and grain terminals. Extreme weather cost ADM $125m in the first half of the year, the company said.
For farmers, the wetness slowed planting of corn in the US this spring, damping expectations for a high-yielding crop.
The company’s leadership offered a non-committal outlook on the bilateral tariff dispute that has battered exports of US soyabeans to China. Talks between Washington and Beijing this week were inconclusive.
“Although the timing is uncertain, we remain confident in the resumption of significant food and agricultural trade flows between the US and China, which will help bolster margins in the US grain export and ethanol industries,” said Juan Luciano, chief executive.
In February, Mr Luciano said he expected the trade dispute to be resolved in the first half of the year.