Big Ag Traders Look to Join Forces

Neil Hume, David Sheppard and Emiko Terazono reported yesterday at The Financial Times Online that, “Some of the world’s biggest traders of agricultural commodities are seeking new alliances and joint ventures as they battle tough market conditions brought on by the end of a decade-long boom for the industry.

“In interviews with the Financial Times senior executives at Cargill and Louis Dreyfus Company said they were looking to join forces with both big producers and consumers after struggling to increase profits in recent years.”

The FT article noted that, “Bumper harvests, overflowing stocks and violent price swings have cut into earnings for the handful of companies that dominate global flows of crops and staple foods.

“At the same time customers in fast-growing markets such as China and Asia are consolidating and using their size to buy directly from producers in the Americas and other regions.”

The FT writers added that, “Crop failures had boosted prices further between 2008 and 2012, sparking fears of food shortages in the poorest countries. But investments, technological advances and increased productivity made during this period has led to surpluses.

The global agricultural industry has also been shaken by the emergence of new players such Cofco, China’s state-owned grains trader.”

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