Slow farmer selling of crops in South America, particularly soybeans, was noted by another agriculture marketer and processor as Archer Daniels Midland Company on Tuesday said its quarterly results in that region were impacted by farmers holding onto crops.
U.S-based ADM reported net earnings of $747 million, or $1.14 per share, for the quarter ended Sept. 30, a 57% increase from a year ago despite 15% lower revenue of $18.12 billion.
Its operating profit in its oilseeds unit was similar to a year ago, with a slowdown in South America offset by improvements elsewhere.
"Continued slow farmer selling limited origination volumes and profits in South America," it said in the earnings statement.
Last week, global agriculture trader and processor Bunge Ltd. reported lower-than-expected third quarter earnings due in part to "the slowest farmer selling in recent memory" in South America.
"In Argentina growers sat on soybeans as hedge against inflation. They are being pressured to sell by the government, which needs export taxes to fund its social programs," said Bryce Knorr, Farm Futures senior grain analyst.
In Brazil, farmers disappointed by low prices forward-priced fewer beans than usual, but selling may increase.
"The reelection of Dilma Rousseff last week against a pro-business candidate weakened the real. That gives growers more purchasing power, because their soybeans are priced off Chicago," said Knorr . "They may begin selling now to help cover input expenses."
That may be one reason the carry to July in the bean market decreased recently, coupled with bull spreading by end users in the United States, he said.