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Recovery in US agriculture, demand from China sustainable in long term: The Andersons

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Recovery in US agriculture, demand from China sustainable in long term: The Andersons

New Delhi — The improvement in US agriculture fundamentals is sustainable in the long term driven by demand from Asian countries -- particularly China, President and CEO of the US-based agribusiness the Andersons, Pat Bowe, said in the company's third-quarter earnings call Nov. 4.

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China -- a major buyer of US agricultural products has stepped up its purchases in recent months to record high levels, supporting firmness in US corn, soybean and wheat prices.

"We expect the increased demand from China to run well into the first quarter of 2021," Bowe said.

As for US corn, Bowe said he expected demand to remain strong into early 2021 on China's buying coupled with improved domestic demand from the ethanol industry.

"If driving continues to recover, and we get past the COVID-19 situation, we can see a pick-up in demand for gasoline and we'll see a pick-up in demand for ethanol," he said.

The company said that US agriculture fundamentals have improved "dramatically" over the last three months, and it expects agricultural commodity prices to remain bullish going forward on the back of dryness concerns in South America, and higher demand.

According to sources, dry weather in Brazil and Argentina is likely to result in smaller crop output in the two countries -- which are the leading producers of corn and soybean.

The company recorded improved on year results from its ethanol segment in the third quarter of 2020, supported by higher crush margins and relatively balanced industry supply and demand, it said.

The ethanol segment recorded EBITDA attributable to the company of $11.1 million in the third quarter of 2020, up from 2019 third-quarter EBITDA attributable to the company of $3.9 million. The results of three of the five ethanol plants were not consolidated in 2019, it said.