MERRIAM, KANSAS, U.S. — Seaboard Corp. posted operating income of $38 million in its Commodity Trading and Milling (CT&M) segment during the fiscal year ended Dec. 31, 2016, up sharply from $2 million in fiscal 2015.

Net sales for the segment during fiscal 2016 totaled $2.778 billion, down 8% from $3.022 billion in the same period a year ago. The decrease primarily reflected lower sales prices for almost all commodities sold and, to a lesser extent, lower sales volume primarily for corn.

“Had Seaboard not applied mark-to-market accounting to its derivative instruments, operating income for this segment would have remained the same in 2016 and been lower by $5 million and $13 million in 2015 and 2014, respectively,” the company noted in a Feb. 21 filing with the Securities and Exchange Commission. “While management believes its commodity futures, options and foreign exchange contracts are primarily economic hedges of its firm purchase and sales contracts or anticipated sales contracts, Seaboard does not perform the extensive record-keeping required to account for these transactions as hedges for accounting purposes. Accordingly, while the changes in value of the derivative instruments were marked to market, the changes in value of the firm purchase or sales contracts were not. As products are delivered to customers, these existing mark-to-market adjustments should be primarily offset by realized margins or losses as revenue is recognized over time and therefore, these mark-to-market adjustments could reverse in fiscal 2017. Management believes eliminating these mark-to-market adjustments provides a more reasonable presentation to compare and evaluate period-to-period financial results for this segment.”

In the filing, Seaboard said it invested $158 million in property, plant and equipment during fiscal 2016, of which $35 million was for the CT&M segment.

“Of the CT&M segment expenditures, $29 million was for the construction of two dry bulk vessels, which were delivered and then sold and leased back by Seaboard at book value of $44 million during the first quarter of 2016,” the company said.

Seaboard also said in the filing it has budgeted capital expenditures totaling $231 million for fiscal 2017.

“The CT&M segment plans to spend $72 million primarily for milling assets, a pulse and grain elevator, and other improvements to existing facilities and related equipment,” Seaboard said.

Overall, net income at Seaboard in the fiscal year ended Dec. 31, 2016, was $312 million, equal to $266.50 per share on the common stock, up from $171 million, or $146.44 per share, in the same period a year ago. Net sales were $5.379 billion, down from $5.594 billion.