Major US grain traders to face off severe blow from US floods, trade war

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Major US grain traders to face off severe blow from US floods, trade war

Severe US weather, which recetntly forced Exxon Mobil Corp. to call off its offshore drilling, would likely to dash quarterly earnings of large US grain companies including Bunge Ltd. alongside Archer Daniels Midland Co. for second straight quarter, while multiple analysts and economists were quoted saying on Thursday, the 11th of July 2019, that an unresolved Sino-US trade dispute would likely to add a double whammy on US grain companies.

ADM, Bunge, Louis Dreyfus Co., and Peers Cargill Inc., usually called as the ABCD quartet of global grain trading giants, had been facing off delayed processing of plants, deferred rail and barge shipping alongside other supply chain disruptions, as a flurry of historic floods had been storming the shores of Central United States.

As beforementioned, the weather crisis had been adding further strains on to a trade-war-hurt US agriculture sector last year, which had witnessed thousands of farmers leaving behind their family farming business amid growing stockpiles due to tariff warfare with Beijing, that had imposed a tit-for-tat tariff on US agriculture following US President Donald Trump’s 25 percent tariff hike on $200 billion worth of Chinese exports.

Following tariff hike on US agricultural products including Soybean, the most valuable US agricultural export, China had been leaning towards Brazil, the largest economy of South America, to cover up its Soybean demand, while US farmers had been battling double blows from stormy weather alongside impacts of tariff hike.

According to industry analysts, ADM and Cargill would be more vulnerable than any other large grain businesses due to their excessive exposure, while a chief economist with Farmers Business Network, Kevin McNew said, “They thrive on volumes and margins and both of those are going to be depressed in the coming year with the bushels being smaller and the margins likely not being there.

Export business is just going to fall off the cliff, especially for corn”. Nonetheless, US corns were likely to be affected more throughout the stormy spring in United States, as Soy seeds were planted later in US.