Commodity Prices have Cargill Facing a Downturn
When commodity prices suffer, everyone along the value chain suffers with them. Cargill announced its first quarterly report for its Fiscal Year 2015 this week, earning $425 million within the period ending on August 31 – that’s a 26 percent drop in earnings compared to the year before, when the business earned $571 million in the same period. Cargill also saw a 2 percent drop in overall revenue, down to $33.3 billion.
Cargill has been facing a lot of difficulties lately – political issues around the world, including issues in the Ukraine that led to the shutdown of one of Cargill’s oil processing plants, certainly did not help. But the biggest problem seems to be an overall economic downturn, marked by falling prices for key commodities like soybeans, corn, and wheat.
Still, it’s not all bad news. Cargill reports that business in its Canadian operation has remained strong due to the carryover strength of good crops in 2013, and its Animal Nutrition & Protein segment saw a rise in sales volumes. In all, the business is optimistic about the road ahead.
“Although Cargill’s first quarter was not as strong as last year, we had several areas of good performance and are optimistic about the opportunities ahead,” said David MacLennan, Cargill’s president and chief executive officer, in a press release from the company. “This year’s big crops, not just in North America but across agricultural production areas worldwide, will enhance food security after several years of weather disruptions. Our company is well positioned to connect these new supplies to growing demand.”
Read more about what worked and what didn’t this quarter in Cargill’s full statement here.