Grain market calm curbs ABF trading profits

Relative stability in grain markets has hit the performance of Associated British Foods' agriculture business, leaving it on course for a drop in interim profits - unlike the rest of the company.

The UK group said it all its divisions had achieved a "strong increase" in revenue in the year to February 27, helped by factors from record sugar prices to, at its Primark clothing stores, higher sales volumes.
However, the agriculture unit would, for a second successive year, report a decline in first-half operating profits, thanks to lower prices of sugar beet, whose value has been depressed in part by rich supplies from a bumper UK crop, and to calmer grain market conditions.

"Trading last year benefits from unusually high volatility in commodity prices," ABF said, adding that its UK grain marketing joint venture, Frontier, had seen "less trading activity".

UK grain traders have for weeks been reporting low volumes, blaming a reluctance among farmers to sell into a weak market, while buyers remain sidelined, waiting for prices to fall even further.