January 20, 2020

Ag Economy; Biotech; Farm Bill; Tax Proposal; and, Food Labels

Agricultural Economy

Gregory Meyer reported yesterday at The Financial Times Online that, “Hoarding by US corn farmers has pinched profits at some of the world’s biggest grain merchants, even as the nation wallows in its largest harvest in history.

“Analysts and executives had expected companies such as Bunge and Archer Daniels Midland to report huge profits from buying and storing corn this year. But quarterly results have been underwhelming, they say.”

The FT article explained that, “Merchants say US farmers are clinging to their 13.9bn-bushel corn crop after prices fell 35 per cent in the past year, setting up a test of wills as Brazil prepares to launch its own huge harvest on to the export market.”

Mr. Meyer pointed out that, “The biggest US trading houses, including ADM, Bunge, Cargill, CHS and Gavilon, a unit of Japan’s Marubeni, have added about 1bn bushels of US storage capacity in the past decade, bringing the total to more than 5bn, according to Sosland Publishing’s 2014 Grain & Milling Annual.

“But soaring cereals prices after the worst drought since the 1930s in 2012 enabled farmers to reinvest income in their own storage bins. US on-farm storage capacity totals 13bn bushels, 2bn more than 10 years ago.”