ADM, Bunge to post solid results despite Hurricane Ida disruptions

CHICAGO, Oct 25 (Reuters) – Global agribusiness companies Archer-Daniels-Midland Co and Bunge Ltd likely turned in solid third-quarter earnings despite weeks of suspended export shipments at the top U.S. grains outlet after Hurricane Ida, analysts said ahead of earnings releases this week.

Both companies benefited from good oilseed and corn processing margins and readily available supplies of grain to trade, process and ship overseas as lofty prices encouraged farmers to sell more crops, they said.

Surging demand for vegetable oils to make renewable fuel also boosted long term prospects for both companies, they said.

The expected robust earnings in the three months ended Sept. 30 would build on a string of strong quarters after profits got a boost from rising food demand and shifts in trade flows during the pandemic.

“We’re in this nice, happy environment where prices are elevated but not so much that they destroy demand,” Ben Bienvenu, analyst with Stephens Inc, said in an interview.

“People are now starting to look to 2022 and export demand is still strong for U.S. grains,” he said.

Export shipments from the Louisiana Gulf Coast, the biggest U.S. grains hub, were suspended for several weeks after Hurricane Ida slammed the area on Aug. 29, knocking out power to ADM and Bunge terminals and causing minor damage.

The outage lasted nearly a month at the onset of the U.S. corn and soy harvest and peak export season. Analysts said it probably hit ADM more acutely than Bunge due to ADM’s larger U.S. footprint.

Most export sales that were scheduled to load in September remained on the books, with shipments pushed instead into the fourth quarter and possibly the first quarter of 2022, they said. A small number of those sales, however, were shifted to other ports, including some in South America.

“With ADM having a larger North American footprint and Bunge having a larger South American footprint, ADM would likely be more impacted. But this is more likely a temporary disruption,” said Seth Goldstein, analyst with Morningstar.

ADM, which reports results ahead of the market open on Tuesday, is expected to post third-quarter earnings of 89 cents per share, according to a consensus estimate from Refinitiv IBES, steady with the same quarter a year earlier.

The consensus analyst estimate for Bunge, which reports on Wednesday, is $1.42 per share, compared with and exceptionally strong quarter a year earlier when a record-high crush pace and historically high margins drove earnings to $2.47 per share.