Anec, Brazil’s grain exporters association which includes ADM, Cargill, Louis Dreyfus among others, has warned that the sector could be seeing its worse performance in 10 years amid bumper crops and poor margins. A spokesman said that merchandising companies had to really look into their risk management practices, adding, “We have to rethink what we are doing.”
Cofco International Ltd (CIL) has announced plans to double direct grain purchases from farmers to 60 million mt by 2022 in its bid to rival the ABCDs of agricultural commodities. The CEO said that CIL would have a turnover of USD 37 billion this year as it is expected to handle 110 million mt grains, of which 80% will be sourced from global traders. The CEO added that plans to launch an IPO were still on.
Bunge has increased the number of executives eligible for cash compensation (if they lose their jobs without cause within two years of a takeover) to include five top executives, from just the CEO previously. A finance expert explained that the move would discourage these executives from trying to stop any acquisition process.
In the world of vegetable oil, Louis Dreyfus is buying Golden Agri’s crushing and vegetable oil refining business in China. The move is part of the trade house’s strategy to focus on core activities such as grains and oilseeds amid declining margins.
Wilmar is collaborating with ING to convert some of its USD 150 million loan into a sustainability performance-linked loan, the first company in Asia to do so, and the first in the palm oil industry. The trade house will improve its environmental and social performance in exchange for a reduction in the interest rate. Sustainalytics will be measuring the progress.
Chinese group CCCC continues on its acquisition binge and is now looking at Brazil’s railway sector, having just bought Concremat Engenharia and the São Luís port project in Maranhão. The group, along with Japan’s Mitsubishi and Sumitomo are each reportedly in talks with Rumo about taking a stake in the 7,208km railway concession in the South Malte.
The commodity trading group Citadel has asked the Commodity Futures Trading Commission to look into the “other reportables” category on the Commitment of Traders (COT) reports. Citadel argues that the category lacks transparency yet represents a significant share of the market – for example 13.8% of the Open Interest in Chicago soft red winter wheat futures. Some say that the category includes prop trading firms and quantitative funds, among others.
US growers and processors of cranberries are hoping that the government will give them the green light to turn excess fruit into fertiliser for the first time ever. Interestingly, Thanksgiving dinner this year was probably the cheapest since 2013 given the global surplus of meat and grains, which are successfully keeping prices low. Meanwhile, a study based on computer simulation of national data forecast that 57% of children aged between 2-19 years in the US are likely to become obese by the age of 35.
Last week we talked about the increasing sea freight costs but have you ever wondered how many vessels there are at sea at any given point? Check out MarineTraffic’s screenshot to see for yourself. It’s impressive.
Finally, for our tech update, the cryptocurrency is making its way into commodity trading with Ukrainian shipping firm Varamar announcing it would now accept payments in Bitcoin. This is expected to be a game changer for countries affected by sanctions that can’t use US Dollars.
