ADM Falls to Three-Year Low as China Digs In on Crop Trade

(Bloomberg) -- Archer-Daniels-Midland Co. shares fell to a three-year low as the deepening U.S.-China trade dispute eroded prospects for a second-half rebound in the agriculture giant's results.

The stock sank as much as 3.5% to $36.46, the lowest since mid-April 2016. The Trump administration has designated China as a currency manipulator as the yearlong trade dispute showed signs of sinking into a quagmire with no end in sight. ADM had expected U.S. trade would be back to normal by the middle of this year. The shares pared losses as two top executives made purchases.

Last week, Chief Executive Officer Juan Luciano tempered his optimism on an immediate trade resolution. He refrained from speculating on when the tit-for-tat tariff dispute between Washington and Beijing would be resolved, while continuing to be upbeat about the months ahead. China, the biggest soybean importer, is signaling a greater focus on supplies from countries including Brazil and Argentina.

“South America is a bit of a weaker spot for ADM” relative to its North American assets, Chris Shaw, an analyst at Monness Crespi Hardt & Co. in New York, said by telephone. It “looks like the U.S. is losing that export market for good” to South America, he said.

ADM, based in Chicago, declined to comment. Since releasing results on Aug. 1, the stock has dropped 9.1%, the second-biggest decline most among 26 companies in the Bloomberg World Agriculture Index. The broad gauge is down 3.7%.

The stock pared losses after regulatory filings showed CEO Luciano purchased 5,457 shares for $199,990, and Chief Financial Officer Ray Young bought 3,400 shares for $124,899. ADM fell 1% to close at $37.42 in New York.

Cofco International Ltd., the trading arm of China's top food company, plans to increase soybean purchases from Brazil by 5% a year over the next five years. Spending on logistics and new silos will increase subject to the “continued existence of a stable and predictable investment environment,” Chairman Johnny Chi said Monday at an industry event in Sao Paulo.

A breakthrough in the U.S.-China dispute may fail to bolster ADM, “given the broadening relationship between China and South America.” Shaw of Monness Crespi Hardt said.

• China Turns Back to Brazilian Beans After Trade War Escalation
• Bunge Earnings Estimates Raised, ADM's Lowered by JPMorgan

To contact the reporter on this story: Mario Parker in Chicago at mparker22@bloomberg.net

To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net, Patrick McKiernan

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