Grain glut to be prolonged: Cargill

12.05.2017

Cargill Inc expects international grain markets to remain oversupplied for a long time due to bountiful harvests and a rise in storage, the head of the global commodity trader said on Friday.

Bumper crops have flooded many markets, dragging on prices for grains and hitting profits at agribusiness giants including Cargill, Bunge Ltd, Archer Daniels Midland and Louis Dreyfus Co.

"There's been several strong seasons of growth and almost near perfect weather conditions both in North America and South America," Cargill Chief Executive Officer David MacLennan told a media briefing in Seoul.

"There are a plenty of supplies in storage, and Brazilian farmers are holding on to their products in the hopes of better prices ... but I don't see the clearing of excess supply or much volatility to up commodity and grain prices in the near future."

Global corn, wheat and soybean inventories have risen for four straight years in the longest stretch of increases since the late 1990s, according to the U.S. government data.

Word grain and oilseed stocks are up 48 percent since 2012/13, compared with production growth of 18 percent and consumption growth of 17 percent over the same period.

Cargill has been simplifying its operations to shift its focus to higher margin-businesses such as food ingredients. In late April, it said it would exit its U.S. cattle business.

MacLennan also said that growing international worries over trade protectionism after Donald Trump became U.S. president had not affected Cargill's business.

"It is the early days of the new U.S. administration, so far we have not seen any impact on trade flows and I'm optimistic that would continue to be the case," he said.

He was also optimistic on trade between South Korea and the United States, saying the two governments would continue to support trade with each other.

His comments come as Trump said in a recent interview that his administration would renegotiate or scrap a "horrible" deal with South Korea to protect U.S. trade.


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