News last update:6 Aug 2012

Souring soy hits Bunge and ADM

Bunge stocks fell sharply Wednesday amid concern about oversupply in the global soybean sector following a profit warning from the company. ADM shares were also in a sell-off.

Bunge, the world's largest oilseed processor, saw its shares close down 14% at $41.61, after its warning late Tuesday. Archer Daniels Midland Co. (ADM), which is less exposed to the soybean market, lost 13% to $24.25.

Agribusiness stocks had already fallen sharply from the record highs last summer as commodity prices cooled.

Analysts had warned for some weeks that utilization rates in oilseed processing have been falling as global demand growth cooled.

Bunge said lower global demand for soybean products, credit constraints in Brazil and limited fertilizer sales were contributing to its pessimistic forecast.

Analysts described the ADM sell-off as an overreaction to the Bunge warning, because the company is less exposed to the Brazilian and fertilizer markets.

ADM doesn't provide an exact figure on how much of its business comes from soybean processing and states that soybean processing is in its oilseed-processing division, which is the company's largest segment by profit.

Bunge also doesn't break out soybean-processing figures, but soybean processing makes up a significant part of Bunge's agribusiness segment, the company's largest division.

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