Souring soy hits Bunge and ADM

Bunge, the world’s largest oilseed processor, saw its shares close down 14%
at $41.61, after its warning late Tuesday. Archer Daniels Midland Co. (ADM),
which is less exposed to the soybean market, lost 13% to
$24.25.

Agribusiness stocks had already fallen sharply from the record
highs last summer as commodity prices cooled.

Analysts had warned for
some weeks that utilization rates in oilseed processing have been falling as
global demand growth cooled.

Bunge said lower global demand for soybean
products, credit constraints in Brazil and limited fertilizer sales were
contributing to its pessimistic forecast.

Analysts described the ADM
sell-off as an overreaction to the Bunge warning, because the company is less
exposed to the Brazilian and fertilizer markets.

ADM doesn’t provide an
exact figure on how much of its business comes from soybean processing and
states that soybean processing is in its oilseed-processing division, which is
the company’s largest segment by profit.

Bunge also doesn’t break out
soybean-processing figures, but soybean processing makes up a significant part
of Bunge’s agribusiness segment, the company’s largest
division.