Bunge slashes earnings forecast amid grain glut

A day after Archer Daniels Midland reported worse-than-expected profits, rival agribusiness giant Bunge slashed its earnings forecast on Wednesday for its agribusiness unit for the year to $425-500m, down from $550-600m.

Net sales for the group were reported at $11.4bn for the quarter, flat to the previous corresponding period, although costs of sales increased to $10.93bn versus $10.87bn, leaving gross profit down $66m to $556m.

“Our earnings improved sequentially and year-over-year, although they continued to be impacted by market and industry headwinds. As a result, we are reducing our earnings guidance for the year in Agribusiness and Sugar & Bioenergy,” said Soren Schroder, Bunge's CEO, in a statement.

The news comes on the back of another bumper grain harvest.

Global production of grain is expected to hit 2.07 billion mt in the 2017/2018 harvest, according to the latest forecast from the International Grains Council, marking the second highest level on record after the 2017/2018 season.

The news will raise interest at Swiss-based trading house Glencore, which earlier this year showed interest in buying Bunge.