(Reuters) - Pesticides and seeds producer Corteva Inc (CTVA.N) on Thursday raised concerns about global corn demand in the latter half of the year, adding to fears that prices could take a further hit from a slump in demand for grain-based ethanol.
Corn prices have fallen sharply tracking a decline in demand for petroleum products, as travel restrictions due to the COVID-19 pandemic hit demand for ethanol. Most of the corn produced in the United States is used to make ethanol fuel.
Corteva, which gets more than half of its seed sales from corn, said on a post-earnings conference call there was significant uncertainty around how much corn would be planted for next year’s season.
“Our assumptions right now is that we could see a 5 to 7 million acre decline in corn,” Chief Executive Officer James Collins said.
Collins, however, added there were “strong indications by China” to purchase corn. The company last year flagged a hit from slowing Chinese purchases due to the trade war with the United States which stretched into late December before a preliminary deal was signed.
Corteva, a former agricultural unit of chemical conglomerate DowDuPont, said it had started taking steps to reduce spending to save about $100 million in costs and was on track for $200 million in merger-related synergies.
The company reported a first-quarter profit on Wednesday that beat analysts’ estimates, but pulled its full-year forecasts citing uncertainties due to the coronavirus outbreak.
The Wilmington, Delaware-based company’s shares were up 6.6% at $26.65.
Reporting by Taru Jain in Bengaluru; Editing by Shounak Dasgupta