March 23, 2020 / 6:36 PM / 10 days ago

Louis Dreyfus sees food demand holding up in coronavirus crisis

PARIS, March 23 (Reuters) - Agricultural commodity merchant Louis Dreyfus Company (LDC) expects food demand to hold up during a coronavirus epidemic as consumption focuses on staples and buyers stockpile around the world, its chief executive said.

Reporting annual results earlier on Monday, LDC said it had not seen a significant impact so far from the coronavirus crisis, although it would not predict how it might affect the rest of the year.

While the epidemic has hurt demand for crop-based biofuels and discretionary food spending, agricultural markets were continuing to see steady demand for staples, Ian McIntosh said in a telephone interview.

Food and feed demand would also be bolstered by China's rebuilding of its pork industry after a swine fever epidemic, as well as short-term upturns in demand, as seen with rice in West Africa and coffee worldwide as the coronavirus outbreak develops, he said.

Stockpiling could be a further driver of food demand as the health crisis makes buyers wary of the concentration of much agricultural production in a handful of countries, he said.

"There's definitely a trend towards increasing inventory levels at destination, thereby mitigating any risk of supply chain breakdown," McIntosh said.

A wave of stockpiling could create volatility in agricultural markets and LDC would look to use its global presence to seize trading opportunities, he added.

He said it was impossible to give an outlook for 2020 in the midst of the coronavirus outbreak, but said the food side of LDC's business had not been affected by the initial outbreak in China.

LDC, which reported a sharp drop in 2019 profits, is continuing talks with potential investors, he said, reiterating an earlier comment by chairwoman and majority shareholder Margarita Louis-Dreyfus that there was no timeline for a deal.

The CEO declined to comment further on the talks.

A cost-cutting programme, announced internally in November, would start to show its effects towards the end of this year, with the full impact expected next year, McIntosh said, declining to disclose planned measures. (Reporting by Gus Trompiz; editing by Barbara Lewis)

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