Low margins prompting ADM to leave global sugar trading

by Jonathan Adams

Archer-Daniels-Midland Co. will soon quit the global sugar-trading business because the operations are not delivering margins sufficient to overcome high financial risks, said a person familiar with the matter on condition of anonymity because of the private nature of the discussions.

The company’s sugar trade reached a peak in the 2011-12 season, when volumes reached 2 million metric tons, with supplies mostly coming from Brazilian millers, the person said. ADM declined to comment on its sugar-trading strategy, citing a quiet period, according to an e-mail from the press office. The company is scheduled to release an earnings report in early August.

Since ADM’s trading peaked, Brazil’s sugar industry has undergone woes, with some processors closing amid low prices for the sweetener. Some of ADM’s rivals took to creating joint ventures to withstand the volatility.

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