An early wheat crop in the Central Valley in Davis, California, U.S., May 1, 2017. Picture taken May 1, 2017. REUTERS
SEOUL: Cargill Inc expects international grain markets to remain oversupplied for a long time due to bountiful harvests and a rise in storage, the head of the global commodity trader said on Friday.
Bumper crops have flooded many markets, dragging on prices for grains such as wheat and corn, hitting profits at agribusiness giants including Cargill, Bunge, ADM and Louis Dreyfus.
"There's been several strong seasons of growth and almost near perfect weather conditions both in North America and South America," Cargill Chief Executive Officer David MacLennan told a media briefing in Seoul.
"There are a plenty of supplies in storage, and Brazilian farmers are holding on to their products in the hopes of better prices ... but I don't see the clearing of excess supply or much volatility to up commodity and grain prices in the near future."
The Minneapolis-based company has been simplifying its operations to shift its focus to higher margin-businesses such as food ingredients. In late April, it said it would exit its U.S. cattle business.
When asked about the possibility of making company acquisitions, MacLennan said Cargill was always looking for growth opportunities.
He added that the firm had no intention of going public in the near future.
MacLennan also said that growing international worries over trade protectionism after Donald Trump became U.S. president had not affected Cargill's business.
"It is the early days of the new U.S. administration, so far we have not seen any impact on trade flows and I'm optimistic that would continue to be the case," he said.
He was also optimistic on trade between South Korea and the United States, saying the two governments would continue to support trade with each other.
His comments come as Trump said in a recent interview with Reuters that his administration would renegotiate or scrap a "horrible" deal with South Korea to protect U.S. trade.
Cargill also plans to keep boosting business in South Korea, he said.
Cargill Agri Purina, a South Korean unit of the company, plans to increase its feed production to 2.7 million tonnes per year (tpy) by 2025. - Reuters
Win a prize this Mother's Day by subscribing to our annual plan now! T&C applies.
