Soybeans trip up top traders, prompt rare offer to U.S. farmers
By Tom Polansek
CHICAGO Aug 24 (Reuters) - Two of the world's biggest agricultural trading houses bungled crop sales they made on behalf of U.S. farmers this year because of what one described as "unique" price moves for soybeans, prompting both to take rare steps to keep disgruntled customers.
Every year, hundreds of U.S. farmers trust major grain traders, including privately held Cargill Inc and Bunge Ltd, to sell parts of their harvests on their behalf for a fee. They hope the global reach and expertise of these companies will secure the best price and profits.
But this spring, a 37 percent surge in U.S. soybean futures caught many traders and veteran agriculture economists off guard. Large supplies were expected to keep prices low, but flooding in Argentina sparked heavy buying instead.
Cargill and Bunge separately sold most of the soybeans they were trading on behalf of farmers at about $9 a bushel, well below the rally's peak near $12 in June, five farmers who used the services told Reuters.
This month, Cargill reported that the surge hurt quarterly earnings because its traders in May had made wrong-way bets that prices would fall. Bunge, too, reported weaker quarterly results for oilseed trading, while Wilmar International Ltd posted its first-ever quarterly loss because of untimely purchases of soybeans.
"We're all trying to figure out exactly what went on," University of Illinois agricultural economist Scott Irwin said about the market's moves.
Cargill Chief Financial Officer Marcel Smits and Bunge Chief Executive Officer Soren Schroder said in separate interviews that their trading programs have worked well for farmers over the long run. They said they did not have details about the programs' results so far in 2016.
It is not clear exactly how many farmers take part in the programs or how much money they feel was left on the table. Continuación...