News

Grain traders cut spending

Some large grain trading firms are cutting spending as a result of low commodity prices.  A story from Dow Jones says Archer Daniels Midland and Bunge plan to spend hundreds of millions less in reaction to the world glut of corn, soybeans and wheat.  Five straight years of bumper crops have kept grain prices low, squeezing farmers and the companies that buy their grains and soybeans.  The situation has changed traditional market dynamics, meaning farmers are storing grain rather than selling it at low prices.  Food companies are avoiding long-term grain orders because the outlook is for prices to remain low.  That’s made it difficult for the grain trading companies.

This week, Bunge reported a 22 percent decline in quarterly profits and ADM said its quarterly net income dropped by 44 percent.  Both companies say they’re cutting annual spending by hundreds of millions of dollars.  They’re not alone. Grain trader Cargill, farm cooperative CHS and fertilizer maker Mosaic have each reported significant losses resulting from low commodity prices.