ADM Sees Chinese Crop Demand Persisting in Boost to Outlook

Strong Chinese crop demand will carry through the “medium term,” reinforcing expectations for another record year of earnings and bolstering prospects past 2021, according to Archer-Daniels-Midland Co.’s chief financial officer.

“I am confident in the momentum from 2020 continuing, this year and beyond,” Chief Financial Officer Ray Young said during Bank of America’s Global Agriculture & Materials Conference on Wednesday. “This is not a one-year phenomenon.”

China has been scooping up huge amounts of U.S. crops to feed a hog herd that’s recovering from a deadly pig disease. That pushed combined American corn and soybean exports to an all-time high in the fourth quarter, helping ADM deliver deliver record earnings per share last year on an adjusted basis. Young reiterated the company’s forecast for a record in 2021.

“The main reason China is aggressively buying agricultural products from around the world is just fundamental demand,” Young said. “And that’s the primary driver as to why China was aggressively importing last year and we expect them to be aggressively importing this year.”

ADM in January reported $3.59 a share in adjusted earnings for 2020. The company’s shares reached an all-time high last week.

Young said he expects recent outbreaks of African swine fever in Chinese hogs will be contained. China’s agriculture ministry this week reported an outbreak of the deadly virus that devastated the herd beginning in 2018.

With the virus held in check, China will import 100 million metric tons or more of soybeans this year, Young said. That figure is on par with the official U.S. Department of Agriculture forecast. China’s corn imports could reach 25 million tons, Young said. That’s just above USDA’s official projection for 24 million.

The rebuilding of the hog herd “is going to drive continued strong demand for feed,” Young said. “So we see strong, continued strong demand coming from China.”

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.