From Agrimoney:
Corporates squabble over impact of drought on farm profits
Will the US farm economy be brought low by drought-reduced yields, or will the boost to prices more than make up for lost production?Agco warned over a potential setback to agricultural equipment groups, at least, from the US drought even as it unveiled a 50% jump in earnings, and raised expectations for its full-year performance.However, the caution contrasted with those from many other agribusinesses, including fertilizer giant PotashCorp and crop trader Bunge, which highlighted benefits from the squeeze on crop supplies.'Strong execution'Agco, the maker of Massey Ferguson and Fendt farm equipment said that earnings for the April-to-June quarter hit $202.1m, or $2.08 a share, up from $133.9m a year before,The increase reflected, besides the acquisition of silos group GSI, price rises, especially in North America and Europe, which lifted revenues by 14.1% to $2.69bn.Meanwhile, costs were constrained by "low levels" of inflation in raw materials costs, reflecting less buoyant energy and metals markets."Agco's strong execution in the second quarter produced record earnings and operating margins of nearly 10%," Martin Richenhagen, the group's chairman and chief executive, said.'Some uncertainty'However, Mr Richenhagen added that while North American "farm economics remain healthy, the current drought conditions across much of the US have added some uncertainty for farm equipment demand for the remainder of 2012 in the region".The statement clashed with more positive assessments on Thursday of drought implications for agribusiness giants.PotashCorp and agrichemicals giant Syngenta forecast that higher crop prices would feed through into higher demand for crop inputs, while Bunge said that market uncertainty would drive farmers and consumers to larger crop traders....MORE
