In a Nov. 8 conference call with analysts to discuss third-quarter results, Bowe went into deeper detail about the company’s grain business, reflecting on The Andersons’ Tennessee elevator, Variable Storage Rates (VSR) and the long-term outlook for the division.
Noting that The Andersons has experienced good results in Tennessee in past years, Bowe acknowledged that 2016 has been a tougher market for the U.S. state.
“Exports are very sharp right now and values for the export market at the Gulf are high, and thus that kind of sucks grain toward the river location to load down to the Gulf, which made it a little difficult for us to buy the kind of normal grain we would like to in Tennessee,” he said. “So Tennessee was not ideal for us as it had been in the past, where we could buy ample supplies of grain. There were a little tougher market conditions in Tennessee this season with the strong export demand. On the positive note of that, for the whole country, having a good export demand is good for premiums across the country.”
Outside of Tennessee, Bowe said The Andersons experienced strong production for corn and soybeans.
“Soybean yields were really strong in a lot of our areas, and farmers are selling some beans at harvest because of high prices, so we’ve had a good soybean program,” he explained. “We’ve exported quite a bit of corn and beans out of the (Great) Lakes this season, our highest number of boats we’ve shipped for many years, so we’re having a robust exports season out of the Cleveland Maumee complex. And across the rest of the Grain Belt, we’ve been filling our capacity as much as we can and buying grain at very reasonable levels, and so that’s overall a big rebound from last year’s crop conditions in the Eastern Corn Belt.”
Bowe said there were some spotty areas in the east that weren’t ideal for corn yields, especially when compared with strong yields seen in Illinois and Indiana. But in general, he said The Andersons was pleased with crop conditions and what that means for storage income for the company.
Bowe also said the company likes its wheat ownership.
“We think there’s going to be good value in carrying and owning wheat in this year’s marketplace,” he said. “Not all of that has come to full fruition yet, but we feel good about the position we’re in as far as our wheat position and how that fits into this year’s grain marketing program.”
Bowe said the company hasn’t knocked it out of the park like it did back in 2011, but does see solid progress and good potential.
“We’ve talked about a more normal storage income rate; we’ve talked about from 15¢ to 35¢ in the past to our analysts,” he said. “This year, we’re going to get back into the low end of that range, so we’re getting back to a more normal storage environment. When I say this year, I mean 2017.
“So, overall, we feel good about where we’re going in grain and like the fundamental shift that occurred with this harvest.”
Net income attributable to The Andersons, Inc. in the third quarter ended Sept. 30 was $1.722 million, equal to 6¢ per share on the common stock, which compared with a loss of $1.227 million in the same period of last year.
Revenue for the third quarter was $859.612 million, down 5.4% from $909.093 million in the same period of last year.