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Why Did the US Halt Bunge’s Canola Meal Shipment?

Gabriel Kane

Yesterday’s Consumer Pops and Drops: WRK, BG, DLPH, LULU, UN

(Continued from Prior Part)

Bunge’s price movement

Bunge (BG) has a market cap of $9.3 billion. It fell by 1.9% to close at $65.17 per share as of January 12, 2016. The price movement on a weekly, monthly, and YTD (year-to-date) basis is -2.1%, 2.6%, and -4.6%, respectively.

Technically, the stock broke the support. It’s trading below all of the moving day averages. Currently, Bunge is trading 1.5% below its 20-day moving day average, 3.0% below its 50-day moving average, and 16.4% below its 200-day moving average.

The Market Vectors Agribusiness ETF (MOO) invests 3.0% of its holdings in Bunge. MOO tracks a market-cap-weighted index of companies that generate more than 50% of their revenue in their agribusiness sector. MOO’s YTD price movement is -6.6% as of January 11, 2016.

The PowerShares Dynamic Food & Beverage Portfolio (PBJ) invests 2.8% of its holdings in Bunge. PBJ tracks a multifactor, tiered equal-weighted index of US food industry stocks.

Bunge’s competitors and their market caps are:

  • Archer Daniels Midland (ADM) – $20.5 billion
  • BRF SA (BRFS) – $11.1 billion

US halted the canola meal shipment

The FDA (US Food and Drug Administration) stopped the shipment of canola meal in the US from Bunge’s plant in Hamilton, Ontario, on December 1, 2015. According to the FDA, the meal contains salmonella bacteria. The bacteria cause foodborne illness in humans.

Bunge’s performance in fiscal 3Q15

Bunge reported fiscal 3Q15 net sales of $10,787.0 million—a fall of 21.1% compared to net sales of $13,676.0 million in fiscal 3Q14. Its net income and EPS (earnings per share) fell to $229.0 million and $1.56, respectively, in fiscal 3Q15—compared to its net income and EPS of $284.0 million and $1.90, respectively, in fiscal 3Q14.

Meanwhile, its cash and cash equivalents and inventories fell by 16.3% and 9.7%, respectively, in fiscal 3Q15—compared to fiscal 4Q14. Its DE (debt-to-equity) ratio rose to 1.8 in fiscal 3Q15—compared to its DE ratio of 1.5 in fiscal 4Q14.

It had PE (price-to-earnings) and PBV (price-to-book value) ratios of 21.7x and 1.6x, respectively, as of January 12, 2016.

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