(Bloomberg) -- Margins made by processing oilseeds in China are finally turning positive, a sign of improving crop demand that could help boost futures markets, Bunge Ltd.’s Chief Executive Officer Greg Heckman said.
The improvement is a turnaround from earlier this year when tepid demand in China weighed on agricultural trading in Chicago. As the world’s largest commodities importer starts to loosen some Covid-19 lockdowns, demand for grain and oilseeds is expected to rebound and improve margins for crop processors like Bunge, Cargill Inc. and Archer-Daniels-Midland Co..
“It is hard to imagine demand can get worse, and the lighter lockdowns are good for demand,” Heckman said in a presentation Tuesday to investors. “We are starting to see spot margins improving.”
Still, crop markets still face plenty of uncertainty, especially with logistical issues and supply-chain snags.
“We believe the current environment will continue for some years,” Heckman said.
Market globalization is still producing shifts for some commodities, he said, noting that China continues to increase its corn buying from Brazil, where Bunge has operations.
“We got a phenomenal origination globally and it makes sense for us and for them to have another source,” he said.
Bunge is still interested in selling its joint venture BP Bunge Bioenergia, Heckman said. While Brazil’s recent election “has frozen a lot of things down there” the company’s hasn’t changed, he said. “When we can get the right price, we will exit,” he said.
--With assistance from Isis Almeida.
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