This study provides an overview of the impact of commodity traders on agricultural markets. It examines the ramifications of financialisation, explores prevailing trends, and confronts the challenges that characterise the industry's landscape. Moreover, after analysing the regulatory state of play at the international level, it provides suggestions towards bolstering the sector's accountability and transparency, essential for fostering trust and sustainability. By scrutinising these aspects, this study offers insights into the intricate dynamics of agricultural trading and its broader socioeconomic implications.
Authors
Axel WION, Armando LUCIANO, Sofia Noelle GONZALEZ, PROFUNDO: Barbara KUEPPER, Linus LINNAEUS TANNOR & Myriam VANDER STICHELE
- Pages
- 4
- Published in
- Belgium
Files
Table of Contents
- CONTENTS 5
- List of abbreviations and acronyms 7
- List of boxes 10
- List of figures 10
- List of tables 10
- Acknowledgements 12
- Executive summary 13
- 1. State of the art — global commodity traders 16
- 1.1. ABCDs Company profiles 16
- 1.1.1. ARCHER DANIELS MIDLAND (ADM) 17
- 1.1.2. BUNGE 18
- 1.1.3. CARGILL 19
- 1.1.4. LOUIS DREYFUS COMPANY (LDC) 19
- 1.2. Importance of top traders in bulk commodities trade 20
- 1.3. The role of commodity traders in managing food stocks and market effects 23
- KEY FINDINGS 16
- 2. Trends and challenges shaping Agri-commodity trading 27
- 2.1. Integration and consolidation trends 28
- 2.2. Vertical integration of up- and downstream segments 29
- 2.2.1. Upstream commodity production 29
- a. ADM 30
- b. BUNGE 30
- c. CARGILL 30
- d. LDC 30
- e. Regenerative agriculture involvement 31
- 2.2.2. Financing and inputs for producers 31
- 2.2.3. Downstream processing and marketing 32
- a. ADM 32
- b. BUNGE 32
- c. CARGILL 33
- d. LDC 33
- 2.3. Horizontal expansion and diversification 33
- a. ADM 34
- b. BUNGE 34
- c. CARGILL 34
- d. LDC 35
- 2.4. Corporate concentration 36
- 2.4.1. Impact on prices 36
- 2.4.2. Limiting marketing concentration 37
- 2.5. Financialisation 38
- 2.5.1. The European milling wheat derivatives market23F 39
- 2.5.2. Non-hedging speculative financial participants 39
- 2.5.3. The dominance of speculative non-hedging participants 41
- 2.5.4. No food crisis but a price crisis? 44
- 2.6. New rival agri-commodity firms 46
- 2.6.1. Drivers of growth 46
- a. Meeting demand 47
- b. Marketing supply 48
- c. Strategic partnerships 48
- 2.6.2. COFCO International (China) 48
- 2.6.3. Wilmar International (Singapore) 51
- 2.6.4. Olam Group (Singapore) 52
- 2.6.5. Kernel (Ukraine) 53
- KEY FINDINGS 27
- 3. Regulatory state of play 55
- 3.1. Regulatory framework in the European Union 56
- a. Agri-commodity trade and stockholding 56
- b. Financial markets 58
- 3.2. Regulatory framework in the United States 61
- 3.3. Regulatory framework in Switzerland 62
- 3.4. Fitness of existing measures 62
- KEY FINDINGS 55
- 4. POLICY recommendations: Potential for monitoring, A focus on Accountability and Transparency 64
- 4.1. Transparency of physical markets 65
- 4.2. Disclosure of financial risks 66
- 4.3. Ensuring integrity of derivatives markets and orderly pricing 67
- 4.4. Investigating and regulating market concentration 68
- KEY FINDINGS 64
- 5. Conclusions 70
- References 71
- ANNEX 1 – Literature List Derivatives Trade and Speculation 90
- ANNEX 2 – ABCD battlecards 92
- ANNEX 3 – Vertical integration 95
- ANNEX 4 – Horizontal expansion AND Diversification 97
- ANNEX 5 – WTO on food stockholding 98
