CHS Inc., the nation’s leading agribusiness cooperative, demonstrated significant growth in its agriculture and fertilizer businesses yet posted a net loss of $38.2 million for the fiscal second quarter ending Feb. 28, 2021. That compares to net income of $125.4 million in the same quarter in fiscal 2020.
The energy segment improved over the previous quarter, yet continued to experience unfavorable refined fuels market conditions related to the COVID-19 pandemic and exceptionally higher costs for renewable energy credits, according to Jay Debertin, president and CEO of CHS Inc.
“These factors resulted in volume and margin declines that significantly reduced earnings compared to prior year,” he said.
The co-op generates renewable energy credits for ethanol and biodiesel through its blending activities, but cannot generate enough Renewable Identification Numbers (RINs) to meet its needs, resulting in RIN purchases on the open market.
"The price of RINs can be volatile, with prices for D6 ethanol RINs and D4 ethanol RINs rising by 350% and 125%, respectively, during the second quarter of fiscal 2021 compared to the same period of the prior year," CHS noted in its quarterly SEC filing.
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However, improved trade relations between the US and export partners “combined with our operating efficiency initiatives led to record grain and oilseed volume increases and continued price gains, significantly improving our ag segment earnings over the prior year,” added Debertin. “Additionally, favorable growing conditions and overall strength in agriculture, helped drive demand for crop inputs, including crop nutrients and crop protection products and services.” declines.
For the second quarter of 2021, CHS reported revenues of $8.3 billion versus $6.6 billion in the fiscal 2020 second quarter.
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