InVivo profits hit by grain market volatility
PARIS Dec 18 (Reuters) - French cooperative group InVivo reported a sharp drop in profits for the 2011/2012 financial year due to volatility in grain prices, which are now trading within a narrow range, and to a drop in sales, which it expects to bounce back this year.
Net profit fell to 4.6 million euros ($6.1 million) for the 2011/2012 year to end-June from 36.5 million euros the previous year, France's largest group of farmers' cooperatives said on Tuesday.
European wheat prices surged in July as the worst U.S. drought in over 50 years rattled international markets but have since stayed within a relatively narrow range.
"We've never seen a price tunnel like that; it's like being in an administrated market," Didier Nedelec, head of InVivo's grain trading division, said.
Despite the long period of price consolidation, however, the outlook for grain markets for the remainder of this season remains hard to read, because traders are grappling with fragile supply, the group said.
After poor weather slashed crops in the United States and other major producing countries, the market was hesitating over the extent to which lower output will ultimately force prices to rise and demand to fall.
For 2011/2012, InVivo warned in June that it expected a loss at its grain trading arm, saying volatile market conditions forced it to be more cautious in risk management.
Group sales fell to 5.7 billion euros for the year from 6.1 billion in 2010/11. But the figure exceeded initial guidance for sales around 5 billion euros, with Chief Executive Patrice Gollier citing an upturn in grain exports and prices towards the end of last season.
InVivo expects sales in the current year to rise back to 6 billion euros, Gollier said.
InVivo groups together 241 farmer-owned cooperatives and is one of the top grain exporters in the European Union's leading crop-producing state.
In addition to grain trading, InVivo's activities span livestock health and nutrition, farm supplies and garden retail. ($1 = 0.7568 euros) (Reporting by Gus Trompiz; editing by Sybille de La Hamaide and Jane Baird)
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