Noble Group severely hit by US drought

The agriculture segment was down mainly due to negative oilseed crush margins.

According to Nomura:

Agriculture segment was down mainly due to negative oilseed crush margins in China and unseasonal rains in Brazil that delayed sugar crushing operations. The company plans to crush 11mn tons of cane for FY12 by extending the crushing for 2 more months into the season. Revenues from sugar crushing to accrue in 2H12.

Noble expects negative crush margin in China to continue while Argentina crush margins may improve.

Severe drought in the US has put enormous pressure on global grains markets. Noble expects to gain from higher sourcing opportunities in South America.

Noble management expects that it may take another couple of years for the sugar harvest to fully supply all the four mills in Brazil. Agriculture segment profitability should slowly ramp up to previous levels as sugar mills utilizations improve.