World Grain - February 2011 - 12

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World wheat area seen expanding in 2011-12
LONDON, ENGLAND — In initial comments about prospects for the 2011 crop year, the International Grains Council (IGC) on Jan. 20 projected a 3% rise in world wheat acreage in 2011-12 from the year before. The prospective gain was attributed to higher prices and a return to normal abandonment rates. “Assuming average yields, production is forecast to rise to 670 million tonnes (from 647 million tonnes in 2010-11),” the IGC said. “The outlook for northern hemisphere grains crops generally appears favorable at this early stage, although much will depend on the extent to which growers expand plantings of spring crops, especially maize and barley.” Revising its supply and demand ﬁgures for the current crop year, the IGC raised its projection for the wheat carryover to 185 million tonnes, up 5 million tonnes from its December forecast but down from 198 million in 2009-10.

Cargill’s earnings double in second quarter
MINNEAPOLIS, MINNESOTA, U.S. — Cargill reported on Jan. 12 net earnings of $1.49 billion in the ﬁscal 2011 second quarter ended Nov. 30, compared with $489 million in the same period a year ago. Excluding earnings from its majority investment in The Mosaic Company, Cargill earned $832 million, nearly double last year’s $420 million. In the ﬁrst six months, Cargill earned $2.37 billion, up from $1.01 billion a year ago. Excluding Mosaic, Cargill’s ﬁrst-half earnings were $1.53 billion, a 74% increase from $878 million a year ago. Consolidated revenues in the second quarter rose 16% to $31.1 billion, bringing the total through the ﬁrst half to $58.9 billion. “Cargill generated strong results across the breadth of our businesses,” said Greg Page, Cargill chairman and chief executive ofﬁcer. “The diversity and balance built into the mix provides the company with a great deal of resilience. By tapping the connectivity among our businesses, we also put more knowledge and insight to work on behalf of customers. Increasingly, they look to Cargill for innovation that supports their growth objectives.” Four of Cargill’s ﬁve business segments posted increased earnings in the second quarter. Results were led by the origination and processing segment, which developed an early and accurate read on the ﬁrst quarter’s weather events and subsequent shifts in trade ﬂows and supply-and-demand dynamics. This enabled the segment to serve import-dependent customers with grain rerouted from alternate origins while handling substantial volatility across agricultural commodity markets. Second-quarter earnings also rose in agricultural services, aided by the bigger grain handling volumes made possible by the large North American harvest. In December, the company announced agreements related to two additional acquisitions: Cargill agreed to acquire a majority share position in PT Sorini Agro Asia Corporindo Tbk. Page Based in Indonesia, the company produces a wide range of starch and starch-based products used in food, beverage, cosmetic, personal care and pharmaceutical applications. The acquisition, which is expected to be completed in the ﬁrst quarter of 2011, would be an anchor for the future growth of Cargill’s food ingredients business in Asia, particularly in Indonesia and Southeast Asia. Cargill also reached an agreement with Calgary-based Agrium to acquire its AWB commodity management business. Subject to various approvals, Cargill aims to complete the transaction in the ﬁrst half of 2011.

Mosaic, Cargill agree to split-off, orderly distribution
PLYMOUTH and MINNEAPOLIS, MINNESOTA, U.S. — The Mosaic Company and Cargill on Jan. 18 jointly announced a transaction that would result in the distribution of Cargill’s 64% stake, or 286 million share position, in Mosaic to Cargill’s shareholders and debt holders. The transaction will enable Cargill to accomplish several important objectives, including maintaining its status as a private company while meeting the diversiﬁcation and distribution needs of the charitable trusts and foundation formed through the estate planning of Margaret A. Cargill, one of Cargill’s largest shareholders, who died in 2006. The transaction also will enhance Cargill’s credit proﬁle and ensure that the company’s ﬁnancial results, compensation plans and management focus are fully aligned with the performance of the businesses Cargill directly manages.
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The transaction is expected to beneﬁt Mosaic by improving its long-term strategic and ﬁnancial ﬂexibility, as well as greatly increasing the liquidity of Mosaic’s common stock. As a result of the transaction, there will be no change to Mosaic’s total outstanding shares, the economic rights of the Mosaic shares or earnings per share. The transaction also is not expected to have any impact on Mosaic’s underlying ﬁnancial performance or current business operations. In carrying out the transaction, Cargill plans to exchange approximately 179 million of its 286 million Mosaic shares with Cargill shareholders, including the Charitable Trusts, for all or a portion of their Cargill stock. Cargill expects to exchange all of its remaining 107 million Mosaic shares for Cargill debt owned by third parties. The transaction is expected to close in the spring of 2011.
February 2011 / World Grain / www.World-Grain.com

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World Grain - February 2011

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