In a world where many global trading houses have taken a hit from the U.S.-China trade war, a giant food trader in Singapore says the spat has been a boon for them – at least in grains.
While Olam International Ltd., one of the world’s biggest agricultural traders, said Wednesday that net profit tumbled 35% in the second quarter on exceptional losses and shrinking revenues from edible nuts and confectionery, sales volumes in the first half jumped 40%, largely due to growth in grains trading. The trade war opened up opportunities to sell Brazilian soybeans to China, the chief operating officer said.
“We have a core portfolio for grains trading across corn, soy and wheat which is what we’ve sustained across multiple markets, but like any other trading business, there’ll be opportunities where we can kind of ramp up or ramp down,” A. Shekhar said on Wednesday. “And this was a good example in the last six months of us ramping up.”
Brazilian farmers have been a clear winner in the trade war, with soybean sales to China surging in place of American beans that have been hit by Beijing’s retaliatory tariffs. While some of the world’s top trading firms have sought to capitalize on increased Latin American shipments, many have still been left reeling from China’s dwindling farm purchases from the U.S.
Archer-Daniels-Midland Co. said it will struggle to meet its earnings target this year without a resolution in the U.S.-China conflict, while Cargill Inc. posted the steepest profit decline in four years as the tit-for-tat measures distorted global farm-product flows. A U.S.-based unit of Marubeni Corp. stopped all new sales of soybeans to Chinese customers due to worsening profitability and uncertainties about trade conditions.