CHICAGO, Ill. (Reuters) — The slow pace of crop sales that has hurt two of the world’s biggest grain traders will likely stretch into next year, says the head of Bunge Ltd.
Chief executive officer Soren Schroder said the forecast for sluggish sales may mean that grain companies will continue to feel economic pressure from limited supplies despite massive grain harvests in the United States.
U.S. farmers will market larger-than-normal percentages of their newly harvested corn and soybeans next year as they delay autumn sales because of weak prices, Schroder said.
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U.S. farmers normally market their grain during the fall harvest, before spring planting or after planting. However, Schroder said the volumes of grain being sold “are shifting a bit in between those three traditional marketing periods.”
His comments came after the company reported lower-than-expected third quarter earnings, partly because of sluggish farmer selling.
In Brazil, growers have marketed only 10 percent of their new-crop soybeans, compared to the normal level of 30 percent or more, Bunge chief financial officer Drew Burke said.
Argentine farmers are holding soybeans as a hedge against inflation and currency devaluations, he added.
Bunge does not expect farmer selling to increase in Brazil or Argentina until early next year “unless there were to be a sizable price or currency movement,” Burke said.
Cargill, a top global commodities trader, said earlier this month that returns in its origination and processing business during a fiscal first quarter that ended Aug. 31 had slipped as farmers held back grain sales.
The company said it was poised to benefit from replenished grain supplies as the U.S. harvest advances in its second quarter.
Farmers are able to postpone sales after expanding their storage capacity and because many are flush with cash after grain prices soared in recent years.
For global traders, the slow pace of selling is “definitely a negative in terms of their ability to be opportunistic buyers of grain,” said Ryan Oksenhendler, an analyst for Arlon Group.
