MERRIAM, KANSAS, US — Seaboard Corp. posted operating income of $25 million in its Commodity Trading and Milling (CT&M) segment during the third quarter ended Oct. 2, down 11% from $28 million in the same quarter a year ago.

Seaboard said the decrease in operating income primarily reflected costs associated with operational changes and higher selling, general and administrative costs, partially offset by derivative contract gains related to mark-to-market adjustments.

“Due to worldwide commodity price fluctuations, the uncertain political and economic conditions in the countries in which this segment operates, the volatility in the commodity markets, changes in ocean freight rates, and the ongoing impacts of the COVID- 19 pandemic, including variants, management is unable to predict sales and operating results for this segment for future periods,” Seaboard noted in a Nov. 2 filing with the US Securities and Exchange Commission. “However, management anticipates positive operating income for this segment for the remainder of 2021, excluding the effects of marking to market derivative contracts.”

Had Seaboard not applied mark-to-market accounting to its derivative instruments, operating income in the segment would have been $12 million, down from $23 million in the same period a year ago.

Net sales for the segment during the most recent quarter totaled $1.27 billion, up 44% from $880 million in the same period a year ago. The increase primarily reflected higher sales prices for most commodities to third-party customers and affiliates, and to a lesser extent, higher volumes to affiliates, partially offset by lower volumes to third-party customers, Seaboard said.

During the third quarter, Seaboard said its CT&M segment increased its ownership in a feed manufacturer and hog producer in Ecuador to 80% from 50%, obtaining control of the equity. Total consideration for the purchase price of the additional ownership interest included approximately $7 million of cash paid, net of cash acquired and Seaboard’s previously held equity interest and pre-existing affiliate trade receivables remeasured at their acquisition date fair values, the company noted.

In the SEC filing, Seaboard said it invested $324 million in property, plant and equipment in the first nine months of fiscal 2021, of which $255 million was in the Pork segment for the construction of a renewable diesel plant, a fuel storage and distribution facility and other projects. For the remainder of 2021, Seaboard said management has budgeted capital expenditures totaling $235 million, mostly in the Pork and Marine segments.

Overall, Seaboard in the third quarter posted net earnings of $94 million, equal to $81.50 per share on the common stock, down 39% from $154 million, or $132.58 per share, in the same period a year ago. Net sales were $2.28 billion in the third quarter, up 38% from $1.65 billion in the same period a year ago.

In the nine months ended Oct. 2, net income was $449 million, or $387.09 per share, up sharply from $24 million, or $20.08, in the same period a year ago. Net sales were $6.77 billion, up 32% from $5.14 billion.