By Archie Hunter and Áine Quinn

Louis Dreyfus Co.’s profit exceeded $1 billion for a second year as the crop giant continued to benefit from volatile agricultural markets.

The company — known as the “D” in the “ABCD” grouping of the biggest agricultural trading houses — said that “ongoing geopolitical tensions” and “climate-related challenges” disrupted markets.

Crop traders have seen huge profits in recent years as major harvest losses and disruptions caused by the war in Ukraine led to wild price moves in grains markets. Still, prices are now stabilizing at lower levels amid a rebound in global stockpiles and fading demand.

While volatility in commodity markets is down from extreme levels, 2023 still saw the price swings and market shortages that merchants crave. LDC’s return on equity dipped to 16.6% - still a strong level for a trading company.

Traders are pumping cash they’ve made in recent years in to new assets. LDC increased its capital expenditure by 16% to $636 million last year, it said in its annual report Thursday. It bought shares in a Brazilian sugar terminal as well as expanding ethanol operations in the country.

LDC said that juices, freight, coffee and soy business lines were highlights. Sugar prices reached the highest in more than a decade last year following disappointing harvests from some of the world’s top producers. Orange juice hit a record high in November as output in key grower Florida suffered due to disease and storms. Coffee also climbed. 

The company’s freight platform posted “satisfactory results,” with ships having to travel further in 2023. Buyers shipped grains from further and further away after Russia’s invasion of Ukraine disrupted traditional trade routes. 

The company is also pursuing a commercial claim in Paris relating to insurers’ “refusal to admit cover” over policies relating to cargo trapped in Ukraine for several months, it said. 

© 2024 Bloomberg L.P.