Cargill profit jumps 34 percent on back of biofuels surge

Cargill Inc., the largest agricultural company in the U.S. and a major player internationally, has announced a massive jump in their second-quarter profits of 34 percent on the back of gains in shipping, trading and processing grains and oilseeds. Net income in the three months to November 30 was up to $662 million compared to $495 for the same quarter the year before, boosted by record demand for corn-based ethanol, and soybean-based biodiesel. Corn prices have reached levels not seen for decades and soybean prices rose 23 percent in just three months.

Cargill not only trades soybeans, but now makes its own soy-based biodiesel at a 37.5 million gallons / 142 million litres a year plant in Iowa which began production last April. The company has also announced plans to build four more ethanol plants in the U.S. Midwest.

Analysis: at some point rising soybean and corn prices may increase the cost of biofuels produced from these important commodity crops too far above the price of petroleum based fuels to be economically viable. Farmers are benefiting from the higher prices at the moment but biodiesel and ethanol are relatively young industries. If oil prices fall further farmers might suffer in the long term if biofuels go south.

Related:

• Rick Wagoner weighs in on fuel prices and Washington's involvement in alternative fuels
• Fuel prices Down Under up and down
• Biofuels industry growing at 25 to 50 percent annually

[Source: The Wichita Eagle]