Reports CTRM for Agricultural and Soft Commodities | Page 44

CTRM for Ags & Softs

Critical Issues in Trading Grains, Beans and Oil Seeds
Globally, the market for grains, beans and oil seeds is being impacted by the consolidation of market entities, with the
largest merchant traders attempting to consolidate market share from farm to consumers. The four largest firms, ADM,
Bunge, Cargill and Louis Dreyfus (known as the ABCD’s) have been buying firms all along the value chain, and the
number of entities operating in the global markets has declined as a result.Despite this consolidation, the primacy of food
commodities does dictate that new market players will continuously
emerge and the markets will remain dynamic.

“Given
today’s
volatile
market,
companies need a complete system to
help manage price risk and exposures.
As the global market leader for CTRM
solutions, OpenLink provides complete
visibility
and
transparency
into
operations, allowing for total control of
the business and more timely decision
making.”

In particular, competition for farm share is increasing, with local
elevators and farm cooperatives (Coops) facing increasing competition
for crops from the larger merchants’ players.Additionally, there has
been an increasing movement away from agricultural advisories to
Elevators/Merchants in providing advice to farmers on commercial
operations (pricing/timing), providing additional commercial options for
farmers wishing to maximize the value of their crops.

Though food crops
commodities,
the
markets
for
grains
Henry Bonner - OpenLink
are subject to the
same
price
pressures felt in other non-food commodities.The recent collapse of
commodity prices, driven in large part by over-supplied market and a
faltering China economy, have driven down prices and increased
volatilities for most food crops, including grains, beans and oil
seeds.Additionally, the increasing linkage of fuel prices with what were
traditionally food crops, such as corn and sugar beets, has further
introduced volatility and made trade and investment decisions at the
farm level more risky.
As genetically modified (GM) grains and agricultural products have
become a more visible topic globally, the tracking of GM grains and
farm products has become a more pressing issues for traders and
merchants.GM farm products require specific tracking throughout their
movements, with each “batch” of commodity maintaining the specific
tracking identifier as it moves through the supply chain.

© Commodity Technology Advisory LLC, 2016, All Right Reserved

are

arguably the

most

important

global

The final price of Oilseeds like
rapeseeds and sunflower is linked to the
results of assay made by each
counterparty (seller and buyer). A first
provisional invoice of goods is issued
with 98% of the contract price when
goods are shipped. During shipping,
samples of goods are taken and sent to
labs. Each count erparty then provides
the other one with the assay results,
which enables them to agree on a final
result which will be taken into account to
issue final invoice.
Alison Ellmann - Brady

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