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Cargill Third Quarter Earnings Jump on Booming Meat Business

Third quarter earnings grew 33%, Cargill Inc. announced on Thursday, supported by low grain prices boosting meat profits.

After three consecutive quarters of losses, the third quarter ending Feb. 28 is the second straight quarter that the agricultural conglomerate posted strong earnings. Even as revenue slipped 11% to $28.4 billion, profits rose to $425 million, Cargill reported, in large part because of strong performance in the meat and animal nutrition businesses and improved earnings from energy trading and road salts. Cargill, which processes beef, pork and turkey in the U.S. and chicken in Latin America and Asia, was able to capitalize on growing consumer demand for animal protein and copious grain supplies driving low corn and soy prices. Other major meat companies have also benefitted from these market fundamentals, as both Tyson Foods Inc. and Pilgrim’s Pride Corp. did better than expected in recent months.

Cargill also produces animal feed, another business that was able to take advantage of a second straight year of bumper corn and soy crops and the resulting low prices that made it cheaper to produce feed. As a result, the unit reported increased sales for the third quarter. Despite slumping prices, record crops, strong overseas demand and improvements in U.S. logistics after grain rail transport backlogs in 2014 hindered grain transport.

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Lynda Kiernan is Editor with HighQuest Group Media and of the Oilseed & Grain News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@highquestgroup.com.

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