Over the past few years, farmers have cut their spending due to low commodity prices caused, in part, by a global glut of commodities.
A Dow Jones report says it’s now commodity traders’ turn to do the same. Companies that dominate the global grain trade, including Archer Daniels Midland and Bunge, Ltd., are cutting spending by hundreds of millions of dollars and restructuring their operations.
Bunge reported a decline in quarterly profit, with the company’s chief executive saying it’s been a “humbling year for grain traders.”
Five years of continuous bumper crops all over the globe have kept grain prices low and overturned the traditional dynamics in the farm sector. The largest trading companies that buy and sell farmers’ products are getting squeezed. Farmers are choosing to store a lot of their corn, rather than sell it to grain companies at low prices.
Some food companies are placing fewer long-term orders as prices continue to stay low putting, even more, pressure on the largest grain trading companies.
From the National Association of Farm Broadcasting News Service.