Net sales for the segment during the second quarter totaled $701 million, down from $707 million in the same period a year ago. The decrease for the three-month period was primarily the result of lower third-party sales volumes, partially offset by higher sales prices to third parties and higher volume of sales to affiliates.

In the six months ended July 1, operating income totaled $18 million, down 36% from $28 million in the same period a year ago. Net sales increased to $1.428 billion from $1.416 billion.

“Had Seaboard not applied mark-to-market accounting to its derivative instruments, operating income for this segment would not have changed for the three-month period of 2017 and would have been $4 million lower for the six-month period of 2017,” Seaboard said in a Aug. 2 filing with the Securities and Exchange Commission. “For the three- and six-month periods of 2016 operating income would have been lower by $18 million and $13 million, respectively. While management believes its commodity futures, options and foreign exchange contracts are primarily economic hedges of its firm purchase and sales contracts or anticipated sales contracts, Seaboard does not perform the extensive record-keeping required to account for these transactions as hedges for accounting purposes. Accordingly, while the changes in value of the derivative instruments were marked-to-market, the changes in value of the firm purchase or sales contracts were not. As products are delivered to customers, these existing mark-to-market adjustments should be primarily offset by realized margins or losses as revenue is recognized over time, and these mark-to-market adjustments could reverse in 2017. Management believes eliminating these mark-to-market adjustments provides a more reasonable presentation to compare and evaluate period-to-period financial results for this segment.”

In the filing, Seaboard said it invested $78 million in property, plant and equipment during the first half of fiscal 2017, of which $7 million was for the CT&M segment. Seaboard said it invested the $7 million in a grain trading and poultry business in Morocco, increasing its ownership interest to 19.4%.

Seaboard also said in the filing it has budgeted capital expenditures totaling $125 million for the remainder of fiscal 2017.

“The CT&M segment plans to spend $30 million primarily for milling assets and other improvements to existing facilities and related equipment,” Seaboard said.

Overall, net income attributable to Seaboard in the second quarter ended July 1 was $58 million, equal to $50.51 per share on the common stock, down from $80 million, or $68.34 per share, in the same period a year ago. Net sales were $1.422 billion, up from $1.357 billion.