Chemical suppliers to the US agricultural sector are blaming bad weather in the Corn Belt for a difficult year so far. Warnings about lackluster sales for the first half are piling up from firms such as Novozymes, DuPont, and Corteva Agriscience.
A cold and snowy winter, followed by a rainy and cool spring, has caused flooding along the Missouri and Mississippi Rivers in Missouri, Nebraska, Iowa, Kansas, and South Dakota.
Novozymes says it experienced a 2% sales decline during the first 5 months of the year. Nearly 20% of the company’s annual sales come from supplying products such as yeast and amylases to the ethanol industry. “Severe weather in the US Midwest are [sic] impacting grain-processing volumes and challenging the planting season,” the Danish company says. “The recovery of our US Bioenergy business has not progressed as expected, and demand in some emerging markets is soft.”
Similarly, last month DuPont said it would take a charge of between $800 million and $1.3 billion. The company blamed slow demand in its biomaterials segment as well as “challenging conditions in U.S. bioethanol markets.”
Farmers are indeed off to a slow start. According to the US Department of Agriculture’s June 10 Crop Progress report, only 83% of the available corn acreage across 18 states had been planted as of June 9, versus 99% last year. Additionally, only 59% of the planted corn is rated in good or excellent condition, versus 77% a year ago.
“What we’re truly experiencing here is unlike anything I’ve ever seen,” said Jim Collins, CEO of the seed and crop protection chemical maker Corteva, at a financial conference late last month. “At this point in the season, we would normally have expected to have had corn planting in the United States essentially complete.”
Corteva saw sales decline by 11% during the first quarter, while it was still a part of DowDuPont. The company expects sales to be flat for the year.
In a note to clients, Morgan Stanley stock analyst Vincent Andrews pointed out that Corteva will likely end up selling more short-maturity hybrid seeds this year, which are less profitable. But Corteva will likely sell more seeds in South America as farmers there make up for the US shortfall, he added.