Die Gesetzmäßigkeiten der Finanzmärkte und die Motive der Finanzakteure und Finanzinstitutionen bestimmen immer mehr die Preise von Agrarrohstoffen und damit auch von Nahrungsmitteln. Welche Preise an den Agrarbörsen und außerbörslich ausgehandelt werden, betrifft Bauern, Bäuerinnen und Konsumenten, aber auch Mühlenbetreiber, Getreidehändler und Lebensmittelverarbeiter. Exzessive Spekulation mit Agrarrohstoffen sind für die starken Preissprünge der letzten Jahre mitverantwortlich. Wenn Preise explodieren und Nahrungsmittel unbezahlbar werden, hungern in Armut lebende Menschen und sie müssen bei Gesundheitsfürsorge und Bildung sparen. So wird Armut zementiert!
Dazu die UNCTAD: „The evidence to support the view, that the recent wide fluctuations of commodity prices have been driven by the financialization of commodity markets beyond the equilibrium prices, is credible.“2
Dazu die Weltbank: „Wir nehmen an, dass Indexfondsaktivität … eine Schlüsselrolle bei der Preisspitze von 2008 gespielt hat. Biosprit spielte auch eine gewisse Rolle, aber viel weniger, als ursprünglich gedacht. Und wir finden keinen Beleg, dass die angeblich gestiegene Nachfrage aus Schwellenländern irgendeinen Effekt auf die Weltmarktpreise hatte.“3
Was ist Spekulation?
Bei der Spekulation gehen Finanzakteure bewusst ein Risiko ein, indem sie auf steigende oder fallende Preise setzen, in der Hoffnung, schnelle und beträchtliche Gewinne zu erzielen. Auf den Finanzmärkten wird mit Anleihen, Aktien, Währungen, Derivaten und Rohstoffen gehandelt. Seit Anfang 2000 zeichnet sich ein deutlicher Trend der zunehmenden Spekulation mit Agrarrohstoffen ab.
Ist Spekulation schlecht?
Nein, die Spekulation mit Agrarrohstoffen ist gut, solange sie die notwendige Liquidität für die Abwicklung von (Waren-)Termingeschäften (Glossar) bereitstellt, die der Absicherung von Preisrisiken im physischen Agrarrohstoffhandel dienen. Schlecht ist hingegen die darüber hinausgehende, „exzessive Spekulation“ (Spekulationsblase). Sie gefährdet das Funktionieren der Warenterminmärkte, erhöht die Preisschwankungen und führt zyklisch zu Verlusten und vermehrtem Hunger. Die Preisexplosion bei Nahrungsmitteln im Jahr 2008 trieb mehr als 100 Millionen Menschen in den Hunger.
Wer spekuliert mit Agrarrohstoffen?
Zu den Finanzspekulanten zählen Banken, Hedgefonds und institutionelle Anleger, d.h. Pensionsfonds, Staatsfonds und Versicherungen. Die Kapitalanlage in Rohstoffmärkten erfolgt vor allem über Swap- Händler4 (Glossar) und Indexfonds (Glossar). Die institutionellen Investoren spekulieren mit Indexfonds. Indexfonds werden passiv gemanagt (d.h. der Fondsmanager trifft keine aktiven Anlageentscheidungen, sondern orientiert sich am Index des Fonds), beinhalten mehrere Rohstoffe (siehe Tabelle), halten mehrheitlich „Kaufpositionen“ („long positions“; Kauf von Terminkontrakten bzw. FuturesGlossar) und setzen auf steigende Preise („betting long“). Ihr Kauf beispielsweise von Weizen- und Maiskontrakten erfolgt relativ unabhängig von den fundamentalen Marktdaten, d.h. von Angebot, Nachfrage und Beständen. Die wesentlichen fünf Indexfonds sind: „Deutsche Bank Liquid Commodity Index“6 (DBLCI), „Dow Jones UBS Commodity Index“7 (DJ-UBSCI), „Rogers International Commodity Index“ (RICI), „Standard & Poor’s GSCI“8 und „Thomson Reuters/Jefferies CRB Index“ (siehe Tabelle auf Seite 2). Die beiden größten Indexfonds sind UBSCI und GSCI.9 Die Deutsche Bank beantragte im Jahr 2006 bei der US Commodity Futures Trading Commission (CFTC), von den Handelsbegrenzungen für Spekulanten („position limits“) ausgenommen zu werden. Sie erhielt zwar keine Ausnahmeregelung, aber die Zusicherung der CFTC in Form eines „no action letters“, dass Überschreitungen der Limits nicht geahndet würden, was quasi einer Ausnahmeregelung gleichkam.
Tabelle 1: Die fünf wesentlichen Indexfonds
|Anzahl der Komponenten||6||19||19||35||24|
Zu den großen Playern im Agrarrohstoffmarkt gehört auch Pimco11, eine Tochter der Allianz, mit ihren Rohstofffonds, die sich am DJ-UBSCI orientieren.12 Pimco legte ihren ersten „Commodity Real Return Strategy Fund“ bereits im Jahr 2002 auf. Im Jahr 2006 boten die großen Player im Anlagefondsbusiness mit ca. 15 Mrd. US$ „Assets under Management“ ihren Kleinanlegern mindestens acht solcher Rohstofffonds an.13 Welche Belege gibt es für Spekulation? Es gibt keinen eindeutigen Beleg, der die beispiellosen Preissprünge („Preisvolatilität“) der letzten Jahre auf den Rohstoffmärkten erklären könnte. Es liegen aber klare Indizien vor, die den Zusammenhang zwischen Preisentwicklung und Spekulation bei Rohstoffen erhärten.
1) Keine alleinige Angelegenheit von fundamentalen Marktdaten
Die Preisentwicklung auf den Agrarmärkten lässt sich nicht allein mit den fundamentalen Marktdaten (Angebot, Nachfrage, Bestände) erklären. Die Gesamtgetreide- bestände14 beliefen sich im Jahr 2006/07 auf 345 Millionen Tonnen (23 Millionen Tonnen weniger als im Jahr 2007/08). Umgekehrt erreicht der FAO-Getreidepreisindex mit 238 Punkten seinen Höchststand erst im Jahr 2008, ein Plus von 71 Punkten gegenüber dem Vorjahr.15 Der Maisbestand erreichte im Jahr 2006/2007 mit 110 Millionen Tonnen den niedrigsten Stand im Zeitraum 2000-2010. Aber die Maispreise erreichten ihren Höchststand erst Mitte 2008 zur Hochzeit der Nahrungsmittelkrise, und das, obwohl die Maisernte 2007/2008 gut ausgefallen war und eine Aufstockung der Lagerbestände um 21 Millionen Tonnen erfolgte. Der Marktpreis wird in einem funktionierenden Markt durch Angebot und Nachfrage bestimmt. Die Beispiele zeigen, dass dies bei den Agrarrohstoffen nicht mehr gegeben ist. Damit entfällt die wichtige Signalfunktion, die der Marktpreis für die Marktteilnehmer innehat.
2) Divergenz von Futurepreisen und Spotpreisen
Wenn ein Termin- bzw. Future-Kontrakt ausläuft, sollten die Future-Preise und die Spot-Preise (im physischen Markt) sich sehr stark annähern. Daraus leitet sich auch die Preisbildungsfunktion der Warenterminmärkte ab. Diese sollen nämlich weitestgehend heute die Marktpreisentwicklungen von morgen abbilden. Die unten stehenden Grafiken zeigen jedoch, dass die Schere zwischen Future-Preisen und Spot-Preisen bei Weizen im Zeitraum 2006/2008 weit auseinanderging. Das heißt: Die Future-Märkte funktionieren nicht mehr. Sie verlieren damit ihre beiden grundlegenden Funktionen: die Absicherung von Preisrisiken und die Preisbildung.
3) Hoher Anteil von „Kaufpositionen“ in der Hand von Indexhändlern
Indexhändler setzen mehrheitlich auf steigende Preise. Dafür kaufen sie Terminkontrakte. Demzufolge gilt: Je mehr Kapital der Indexhändler in den Kauf von Terminkontrakten fließt, desto höher ist der Preisdruck nach oben. Die folgende Grafik macht deutlich, dass steigende Nahrungsmittelpreise in der Tat mit einem Anstieg von „Kaufpositionen“ korrelieren. Interessanterweise sank der Zahl der Kontrakte, die von Indexfonds gehalten werden, bevor es zu einem extremen Preisverfall Mitte 2008 kam.
4) Starke Korrelation zwischen Indexfonds und Preisentwicklung
Über die Indexfonds floss seit 2004 viel Kapital in Agrarrohstoffe. Die folgende Grafik zeigt die Entwicklung der Rohstoffpreise (schwarze Linie) und der zwei größten Indexfonds (DJ – Dow Jones, S&P GSCI). Die „Investitionen“ stiegen von 13 Milliarden US$ im Jahr 2003 auf 317 Milliarden US $ im Juli 2008. Im gleichen Zeitraum stiegen die Preise der Rohstoffe, die in den Indexfonds enthalten sind, um das Dreifache an.
Der massive Einstieg von institutionellen Anlegern in die Rohstoffmärkte führte dazu, dass Swap-Händler mehr Positionen bei Warentermingeschäften halten. Swap-Händler verkaufen „swaps“ (Glossar) außerbörslich (over-the counter, OTC) an institutionelle Anleger – z.B. an Pensionsfonds – und sichern selbst ihr Preisrisiko wiederum mit dem Kauf von Futures ab. 19 Für den OTC-Handel liegen keine genauen Daten für Agrarrohstoffe vor. Bekannt ist allerdings, dass der Handel von Rohstoff-Derivaten ( Glossar) im Zeitraum von 2002 bis Mitte 2008 wertmäßig um das 20-Fache auf 13 Billionen US$ gestiegen ist.20
Derivate: Umfasst als Sammelbegriff jegliche Art von Finanztermingeschäften, also Verträge, die börslich oder außerbörslich abgeschlossen werden und an die Entwicklung eines Basiswerts (Indices, Preise, Kurse, Rohstoffe u.a.) gebunden sind.
Indexfonds: Investmentfonds, die Derivate nutzen, um die Fondsperformance an den Index (gewichtete Verteilung einer festgelegten Anzahl von Rohstoffen) zu binden. Institutionelle Investoren beauftragen meistens Banken (Swap-Händler) mit dem Management der Indexfonds.
Positionslimit21 (englisch: „position limit“): Dies bezeichnet die absolute Obergrenze der Zahl spekulativ ausgerichteter Kontrakte, die von einem einzelnen Akteur (Trader) in jedem Markt gehalten, aber nicht überschritten werden darf.
Swap-Händler22: Die vier größten Händler, die Swaps handeln, sind Goldmann Sachs, Morgan Stanley, J.P. Morgan und die Barclays Bank. Sie kontrollieren 70 Prozent der „commodity index swap positions“.
Swaps: Ein Swap beinhaltet grundsätzlich den Austausch zweier Zahlungsströme, von denen mindestens einer von einem gehandelten Basiswert abhängt. Swaps werden außerbörslich gehandelt.
Termingeschäft: Ein (Waren)-Termingeschäft ist ein Vertrag über die zukünftige Lieferung und Abnahme einer Ware zu einem fest vereinbarten Preis. Man unterscheidet zwei Hauptarten: Bei einer Option erwirbt der Käufer das Recht, die jeweilige Ware abzunehmen. Bei einem Future ist er dazu verpflichtet. Der Verkäufer ist in beiden Fällen zur Lieferung verpflichtet. Wird das Vertragsverhältnis beendet, kann der dann herrschende Preis der Ware unter oder über dem vereinbarten Preis liegen. Daraus errechnet sich, ob und wie viel Gewinn oder Verlust eine der Vertragsparteien bei dem Geschäft macht. In der Regel kommt es zu keiner realen Warenlieferung, die Differenz wird finanziell ausgeglichen.
1 SOMO (2010): Financing Food. Financialisation and Financial Actors in Agriculture Commodity Markets. http://europeansforfinancialreform.org/en/system/files/FinancingFood.pdf.
2 UNCTAD (2009): The global economic crisis: systemic failures and multilateral remedies. Chapter III: Managing the financialization of commodity futures trading. S. 38.
3 Weltbank (2010): Placing the 2006/2008 Commodity Price Boom into Perspective.
4 US Senate (2009): Excessive Speculation in the Wheat Market. Permanent Subcommittee of investigations. S. 7.
5 Siehe FN 3. S. 6.
9 Siehe FN 3. S.6.
10 Lines, Tom (2010): Speculation in food commodity markets. April 2010.
11 Stewart, Sinclar, Waldie, Paul (2008): Feeding Frenzy. http://www.iatp.org/tradeobservatory/library.cfm?refID=102948.
12 Siehe unter anderem: http://www.allianzinvestors.com/Products/pages/461.aspx.
13 Futures Industry (2006): Mutual Funds Tap Into Commodities. http://www.futuresindustry.org/fi-magazine- home.asp?a=1117.
14 Die Bestandsdaten werden generell nicht empirisch erhoben, sondern berechnet.
15 USDA: Grains: World Markets and Trade Archives. http://www.fas.usda.gov/grain_arc.asp.
16 Siehe FN 2. S. 7.
17 WDM (2010): The great hunger lottery. How banking speculation causes food crises. July 2010.
18 Masters, Mike (2008): Testimony of Michael W. Masters, Managing Member/Portfolio Manager, Masters Capital Management, before the Committee on Homeland Security and Governmental Affairs. United States Senate. June 24 2008.
19 Siehe FN 2. S. 36.
20 Siehe FN 2. S .26.
Geschichte der Warenterminmärkte
- 2010 Der Wall Street Reform Act (Dodd-Frank Act) tritt in Kraft, er sieht verschiedene Reformen für die Terminmärkte vor, u.a. die Einführung von strengeren Positionslimits, die Erfassung von „Major Swap Dealern“, und die Rückführung des OTC-Handels durch „Non- Commercials“ auf Börsen.
- 2009 Der US-Senat stellt „exzessive Spekulation“ im Weizenmarkt fest. Die US-„Commodity Futures Trading Commission“ (CFTC) erfasst Swap-Dealer gesondert.
- 2008 Preisspitze in den physischen und Futures-Märkten (Nahrungsmittelkrise)
- 2007 Die CFTC veröffentlicht erstmals den wöchentlichen „Commodity Index Traders“-Bericht (CIT) als Ergänzung zum traditionellen „Commitments of Traders“-Bericht (COT). Die „index trader positions“ spiegeln die Positionen der Pensionsfonds wider, die vorher als „non-commercials“ klassifiziert wurden, und „swap dealers“, die vorher als „commercials“ (hedgers) galten.
- 2006 Die CFTC nimmt Indexfonds von den Positionslimits aus, die für Spekulanten gelten.
- 2005 Die CFTC weitet die Positionslimits für Spekulanten beim Handel mit Weizen, Mais und Sojabohnen aus.
- 2000 Mit dem Commodities Futures Modernization Act wird festgelegt, dass die CFTC verschiedene Energie- und Finanzderivate gar nicht oder nur begrenzt beaufsichtigt.
- 1997 Der „Ontario Teachers’ Pension Plan“ investiert als einer der ersten Pensionsfonds 100 Mio.US$ in Rohstoffe. 1991 Erste Ausnahmen vom spekulativen Handel für Swap-Händler.
- 1990 CFTC beschließt, dass „Brent North Sea“-Verträge Forward Verträge sind und deshalb nicht der Regulierung unterliegen.
- 1989 CFTC gibt ein „swaps policy statement“ heraus, mit dem sie verkündet, dass sie nicht anstrebt, OTC-Swap-Transaktionen zu regulieren.
- 1974 Die US-Regierung ruft die „Commodity Futures Trading Commission“ (CFTC) ins Leben, um Rohstoffe zu regulieren.
- 1943 In Kanada wird dem „Canadian Wheat Board“ eine Monopolstellung für die Vermarktung von Weizen eingeräumt. Die Winnipeg Exchange wird suspendiert.
- 1936 In den USA wird mit dem „Commodity Exchange Act“ die Regulierung für den Handel mit Baumwolle, Butter und Eiern und anderen landwirtschaftlichen Produkten eingeführt.
- 1935 Das „Canadian Wheat Board“ – aufgelöst 1920 – wird wieder eingerichtet, um Weizen zu vermarkten.
- 1922 In den USA wird der „Grain Futures Act“ verabschiedet, als Antwort auf weitreichende Manipulationen auf den Warenterminmärkten. Das Gesetzt geht hart gegen exzessive Spekulation vor und führt eine Rahmengesetzgebung zur Regulierung von Warenterminmärkten ein.
- 1887 Gründung der Winnipeg Grain and Produce Exchange (1972 umbenannt in Winnipeg Commodity Exchange) in Kanada.
- 1848 82 Geschäftsleute gründen das „Chicago Board of Trade“ (CBOT) für Produzenten, Käufer und Verkäufer von Getreide.
- Die wahren Weltmächte! Für sie sind Krieg, Börsen und Regierungen die Spielfelder! (derblauweisse.wordpress.com)
Uli’s Insider: Louis Dreyfus futures markets to hedge, there is very little publicly and less information.
Der Rohstoffhandel hat seine eigenen Gesetze. Anders als am Aktienmarkt, gibt es an den Terminmärkten keinen verbotenen Insiderhandel.
Ein Wissensvorsprung ist bares Geld wert.
The four big commodity traders – Archer Daniels Midland (ADM), Bunge, Cargill and Louis Dreyfus, collectively referred to as ‘the ABCD companies’ – are dominant traders of grain globally and central to the modern agri-food system.
Based on the findings, there are some conclusions:
1. The ABCDs matter.
They are not alone, nor unchallenged, but they remain the overwhelmingly dominant traders of grain globally, and what they do is central to understanding international markets (and the domestic politics of food in many countries, too). Too often invisible in policy debates about farmers and consumers, these companies are careful about where and when they get involved in such debates, rarely seeking the limelight. They do not have brand names to protect in the way that a food processor such as Nestlé does. ADM is publicly listed and Bunge is also a fully public company. Dreyfus and Cargill remain essentially family-owned businesses. None of the companies is very forthcoming about its activities, and to track their activities requires patience and guesswork. However, despite the difficulties, it is important to understand their role and their interactions with other companies, national and global.
2. The ABCDs are evolving.
This is inevitable, given the way of the world but also given the changes that globalization has brought in its wake. At this stage in their evolution (and some of the companies are over 150 years old), they have begun operating in some cases like banks (and banks, in turn, have found themselves trading on commodity exchanges). The ABCDs continue to trade grain, but grain is not their only activity, nor is it where their growth is most impressive. As they grow, they need more capital, and there is constant pressure for the historically family-owned company, Dreyfus, to undertake public share offerings. With that will come legal demands for greater transparency, although probably not enough to satisfy concerns about the potential for abuse of oligopolistic market power.
3. The ABCDs do not operate in a vacuum.
They are shapers of the world they inhabit, but they are also shaped by it. New realities, particularly the rise of new economic powers, including China, Brazil, and India, as well as the re-emergence of Russia and some of the former Soviet republics as agricultural powerhouses, are reshaping the global economy. The ABCDs are responding and adapting to those changes, as well as playing their part in deciding the direction that events should take. The new emerging powers are not as wedded to open trade, deregulated markets, and deregulated capital flows as are the governments they now challenge (the United States and the European Union, in particular). One effect of this change in the balance of power has been to make the likelihood of a meaningful outcome to the Doha negotiations at the World Trade Organization (WTO) improbable. These changes and their implications are only just becoming apparent.
‚Financialization’ has entered the policy insiders’ lexicon as an overarching term to refer to the increasingly important role that investors play in the food system. Traditionally the food system involved producers (farmers) and a series of commercial interlocutors, who traded, processed, distributed, and sold food. Today, banks and other investors, as well as dedicated investment funds established as subsidiaries of the ABCDs themselves, have invested billions of dollars in food commodities with no interest in taking possession of any physical commodity. Their behaviour is intimately linked to what is happening in the physical trade of food, of course, but it also affects that trade by affecting prices and behaviour. This is what is meant by the financialization of commodity markets. A second dimension of financialization is also considered, that of production itself. In this case, the term refers to the increasing involvement of investment funds of different kinds in buying or leasing land and producing agricultural commodities.
Not all grain is traded:
in fact, most production never crosses a border. For example, only about 18 per cent of world wheat production and 10 per cent of maize production is traded globally. The figures for oilseeds are higher: around 34 per cent of soy crosses a border and 75 per cent of palm oil production, making this last more typical of traditional tropical commodities, such as tea, coffee, and cocoa, which are grown in one part of the world (the tropics) for consumption elsewhere. In either case, the same few companies overwhelmingly dominate that share of the harvest of grain or oilseed that is traded. Those few companies are the ABCDs. The ABCD traders tend to be privately held, opaque, and answerable to a board that comprises family members, employees, and/or a handful of private investors. Combined with the traders’ undoubted economic might, this tends to breed suspicion and conspiracy theories – which are sometimes well founded, as ADM’s payment of a record fine when it was found guilty of pricefixing in 1998. Yet, while undoubtedly giant in their global reach, their access to capital, and their power over the producers who sell them their crops, the traders are also subject to their own share of pressures and constraints that force them to constantly reassess their strategies and to evolve the way that they do business.
Indeed, the traditional realm of the ABCD companies (bulk commodities) is growing only slowly relative to consumer-oriented or intermediate products in the agri-food sector, and their share of world trade in food and fibre products is diminishing. This is due to the major shifts that are taking place in world production and trade in food, in turn a consequence of the redistribution of power along the agri-food supply chain with the emergence of global retailers such as Wal-Mart, Carrefour, and Tesco, and changing consumer tastes and expectations. As a consequence, trade in agri-food commodities is increasingly dominated by exports and imports of processed and value-added products, while trade in bulk commodities, which until the early 1980s accounted for most agricultural trade, now accounts for only one-third of the total.Yet it is also notable that among the four big categories of global agri-food companies (input providers, grain traders, food processors, and food retailers) it is the grain traders that have changed the least in two decades of extraordinary change in the food system. Chemicals companies such as Monsanto and Ciba-Geigy have been reborn as ‘life sciences companies’ with their move into agricultural biotechnology and pharmaceuticals. In the process, they have seen many mergers and splits, and have largely taken over the commercial seed sector. Food processors, too, are constantly in motion – Unilever and Nestlé are two continuing giants in this group, but many other firms have been swallowed up or merged into new entities, and the existing processors are also constantly changing and adapting. The so-called supermarket revolution is perhaps the best-documented shift of all – and the most dramatic. Supermarkets now reach down right to the fields where crops are grown, sometimes halfway around the world from where the crops are eventually sold. Supermarkets have truly penetrated every continent, though their presence is least well established in sub-Saharan Africa. Wal-Mart is today the largest firm on the planet, judged by the Fortune 500. In contrast, the only new firm in the top five commodity traders since the mid-19th century is ADM, which was founded in 1902 but which only became a global player in the 1970s. The one other change occurred in 2002, when one of the big five, the Swiss-based André, went bankrupt. Bunge is now just six years from its 200th year of continual operation. These huge firms are not likely to disappear any time soon. They, too, are adapting and they continue to grow and prosper, even though they have garnered less attention than the inputs, processing, and supermarket sectors over the past two decades. For example, a rapid expansion in the consumption of meat products has fuelled significant growth in the demand for feed, which is made from crops such as soy, wheat, and maize. Similarly, the rapid growth of the biofuels sector is dependent upon the crops in which the ABCD companies specialise, especially sugar and maize for ethanol, and palm oil and soy for biodiesel. These new areas of demand ensure the continuing expansion of commodity trading companies. Moreover, the ABCD companies are not just traders of physical agricultural commodities: they operate all along the agri-food supply chain as input suppliers, landowners, cattle and poultry producers, food processors, financiers, transportation providers, and grain elevator operators, and they provide much of the physical infrastructure involved in agri-food production and marketing. The commodity companies are also increasingly diversifying into the production and marketing of industrial products that are derived from agricultural commodities – such as plantbased plastics, paints, and industrial starches. In the changing global environment in which the global agri-food system operates, the ABCDs continue to play a unique role. They have the capacity to produce, procure, process, and deliver the raw material inputs that are at the heart of the modern agri-food system, and they are uniquely placed to exploit opportunities across a wide range of activities tied both directly and indirectly to the production and trade in agricultural commodities. As a consequence, they continue to exert a great deal of influence over global food systems and over the lives and consumption patterns of farmers and consumers throughout the world.
THE COMMODITY TRADERS’ BUSINESS MODEL
Despite their diversity in terms of scale, scope, and focus, there are several specific features that the ABCD companies share. These are separated here into ten specific components, but it should be noted that these components and functions overlap and reinforce each other in significant ways. Taken together, these components can be said to constitute the main framework of the companies’ business models.
1. Originators of bulk commodities.
2. Price-setting or market power.
3. High-volume bulk trade.
4. Focus on ‘ingredient’ or ‘input’ commodities.
5. Transportation, storage, and logistics.
6. Continuous growth in size through acquisitions, mergers, and private family funding models.
7. Flexibility in modes of landholding and sourcing of raw materials.
8. Arms-length access to land.
9. Active risk and financial management.
10. Active engagement in shaping the regulatory context.
These ten features together are part of a model that seeks to minimize risk and manage outcomes by controlling as much as possible of the production, pricing, trade, logistical base, financial income, and regulatory context, and by hedging against future uncertainties. Through each of these components of their strategy, privileged access to information is key to the companies’ success. Their activities in all of these areas guarantees them access to the information they need regarding supply, demand, and risk, while promoting a regulatory environment that privileges their way of doing business.
THREE COMMODITIES: SOY, PALM OIL, AND RICE
They are mainly soybeans, wheat, maize, palm oil, sugar, and, to a lesser extent, rice. Three commodities are described here to illustrate the ABCDs’ role: soy, palm oil, and rice.
The top producers of soybeans worldwide are the United States, Brazil, Argentina, China, and India. China is also the world’s biggest importer, followed by the European Union, Mexico, and Japan, while the USA is still the world’s largest exporter, followed by Brazil, Argentina, Paraguay, and Canada. Argentina is the largest exporter of soybean oil, by far, followed by Brazil, the USA, the Netherlands, and Paraguay.
About 85 per cent of the global soybean harvest is processed, or ‘crushed’, into soybean meal and oil. Approximately 98 per cent of the soybean meal is further processed into animal feed. The remaining 2 per cent is used to make soy flour and proteins. Of the 15 per cent that is turned into oil, 95 per cent is consumed as edible oil. The remaining 5 per cent is used for industrial products such as fatty acids, soaps, and biodiesel. Some 90 per cent of US biodiesel is made from soybean oil (this percentage is lower in Europe).
Soy processing is dominated by the ABCD companies. Soybean oil costs roughly twice as much to produce as palm oil and so processors have to exploit significant economies of scale to remain competitive. This means that soybean crushing is a capital-intensive industry. The same companies (Bunge, Cargill, and ADM) dominate in all the major exporting countries. Within the USA, these three firms process 71 per cent of the crop.
The soybeans traded globally are typically grown on industrial farms, and increasingly the world supply comes from genetically engineered seed. Brazil resisted GM soy for some years, but has since dropped its resistance, and GM seed now dominates production there too. The GM seed is overwhelming provided by Monsanto.
Soybean expansion in Brazil has been responsible for significant population movements into the Amazon forest region; an estimated 11 agricultural workers have been displaced for each person employed in soybean production in Brazil, and this has fuelled a huge migration to the Amazon, where they have cleared forest to create new farms. More recently, the Amazon ‘Soy Moratorium’ and the expansion of production in the Cerrado savanna region have been accompanied by a dramatic decrease in Amazon deforestation. There are family farms producing soybeans in the USA and in Brazil, but the farms are heavily mechanized. It is not a sector with many small-scale producers.
Soy production relies on relatively little use of pesticide but rather more herbicide. Overall, soy production and end-use are significant contributors to climate change: soy production relies on fossil fuels and fossil fuel-derived inputs for production, processing is energy-intensive, significant transportation is required to move the commodity around the globe, and the primary end-uses (feed and fuel) are themselves both associated with significant greenhouse gas emissions.
2. Palm oil
Palm oil is used mainly for the production of edible oils for the food industry. More recently, it has also been used as a feedstock for biodiesel. Palm oil and its derivatives are found in half of all processed and packaged foods; these foods use some 70 per cent of all palm oil production. Among the leading companies that buy palm oil for this purpose are Nestlé and Unilever.
The rapid emergence of biofuels as a competing source of demand for palm oil has led to significant pressures to raise output in recent years. Production in the two leading producer countries – Malaysia and Indonesia, which together account for 87 per cent of world output – has increased very significantly. Malaysia’s output grew from 10,842,100 metric tonnes in 2000 to 16,993,000 tonnes ten years later, an increase of 57 per cent. In Indonesia, the increase was 214 per cent over the same ten-year period. This increased production has for the most part relied on expansion of cultivated areas. Indonesia has indicated that it is planning to cultivate another 4m hectares by 2015 for use in the biofuels sector alone, while overall demand for palm oil is expected to double by 2030 and to treble by 2050.
Most oil palm is cultivated on large-scale plantations, since the economics of milling and marketing favour a larger scale of operations. Nonetheless, smallholders in Malaysia and Indonesia still account for some 35–40 per cent of the area planted to oil palm and around 33 per cent of production. Most of these smaller producers are located within a short distance of a mill, since the oil fruit must be processed within 24 hours of harvesting if the crop is not to lose quality. To this extent, smallholders are in a contractual relationship with the plantation operators and mill owners, which in turn are usually owned and operated by a few large companies.
Cargill owns two plantations in Indonesia and accounts for around 11 per cent of the value of the country’s exports of palm oil. The company has long had a presence in Malaysia, but as a refiner rather than as a plantation operator, taking supply from palm oil mills throughout the country. One of the largest plantation owners is the Wilmar Group, a Singapore-based conglomerate that owns more than 235,000 hectares of palm oil operations in Indonesia and Malaysia, as well as fertilizer and shipping interests. The close links between the producers and the commodity traders are well illustrated in the case of Wilmar and ADM. Following a series of mergers, acquisitions, and strategic partnerships between Wilmar, the Malaysian Kuok Group, and ADM in 2006, Wilmar emerged as one of Asia’s leading agribusiness groups, and ADM ended up with a 16.4 per cent ownership interest in the company.
Rice is the most widely consumed grain in the world, but it is also the least traded. The leading producer country is China, with an output in 2008 of 193,354,175 tonnes of rice paddy. But China’s rice exports were only 22,000 tonnes – just 0.01 per cent of production. Thailand is the world’s leading exporter: in 2008, it exported 8.6m tonnes of its total production of 31.6m tonnes, or just over 27 per cent.
Following Thailand in terms of export volumes is Viet Nam at 4.7m tonnes, then Pakistan and India, each with about 2.4m tonnes. The leading importers are the Philippines at 2.5m tonnes, the United Arab Emirates at 1.2m tonnes, and Iran at 1.1m tonnes. In total, only 5–7 per cent of global rice production is traded. Most countries only engage in trade when there is a surplus of production (i.e. not regularly), or where demand exists for a higher-quality product that is sought in wealthier markets, such as the sale of jasmine rice from Thailand and basmati rice from Pakistan.
Louis Dreyfus is the only one of the four big commodity traders to have any significant involvement in the rice trade. The company sources paddy, brown, and milled rice from all over the world and transports it mainly to Africa, where it holds an estimated market share of 30 per cent. Louis Dreyfus is the largest single purchaser of Thailand’s export rice, taking about 700,000 tonnes a year. This gives it an 8 per cent share of Thailand’s rice exports. Another major exporter is the Singapore-based Olam International, which is among the top three suppliers of rice, cotton, cocoa, and coffee to world markets. In the latter part of 2010, Olam International and Louis Dreyfus entered into negotiations which, had they succeeded, would have created the largest rice exporting company in the world. However, the merger talks collapsed in February 2011.
Financial services divisions of the ABCDs
Regulation and the ABCDs’ financial activities
The fact that the ABCD firms are providing financial services for speculative purposes to external investors, even if they do not engage in such speculation for their own benefit, does raise important questions about the role of the traders in the increase in speculative investment in agricultural and food markets. Traders, because they have a commercial link to physical markets, have long enjoyed exemptions from regulations designed to curb manipulation of the market by speculators (particularly exemptions from position limits), on the grounds that they needed to be able to hedge the risks they run in buying, storing, and selling commodities. These exemptions also apply to their financial dealings on commodity futures markets because they are ultimately ‘end-users’, or commercial traders i.e. they deal in the physical commodity as a key part of their business.
The ABCDs argue that they are hedging genuine risk as end-users when they engage in the futures and agricultural derivatives markets, and thus should remain exempt from regulations that have been put in place to prevent excessive speculation. However, there is an obvious weakness in the traders’ argument. Once those funds are open to other investors, how do the ABCDs justify not playing by the same rules as others? If the companies wish to sell their services to investors, that activity ought to be clearly and wholly separate from any of their commercial hedging activities, with the burden of proof that that this is so resting clearly with the trading firm.
Questions have also been raised about whether these firms are manipulating markets for their own gain. Bunge Global Markets was found in 2009 to be in contravention of the Commodities Exchange Act by the US Commodity Futures Trading Commission (CFTC). Twice in March 2009 Bunge traders placed buy and sell orders for soybeans in the pre-opening trading session, which they then cancelled before the market session opened. The CFTC found that the traders had no intention of executing those orders (something that the traders openly acknowledged), but instead were deliberately seeking information about support for specific price levels. Their activity influenced the Globex (electronic trading platform) Indicative Opening Price (IOP), which is an opening price broadcast to Chicago Mercantile Exchange market feed data and all CME Globex users. The CFTC noted, ‘If successful, they would have obtained information that was unavailable to other traders. Because the traders had no intention of allowing the orders to be executed, placing the orders caused prices to be reported that were not true and bona fide…’ and as such were in violation of parts of the Commodity Exchange Act.100 The CFTC ruling was released in 2011, and Bunge was fined $550,000 for this violation and ordered to ‘cease and desist’ from violating those parts of the Act.
Regulatory reform and the reaction of the ABCDs
The regulatory context
In the USA, agricultural futures markets have been tightly regulated for nearly a century. The Grain Futures Act of 1922 required that all futures trading could only take place on approved exchanges, which were required to outlaw manipulation or cornering of the market. Daily reporting of trading on the market by large traders has been required since 1923, on the grounds that the large traders could influence prices and needed to be more closely monitored than others. The US Commodity Exchange Act of 1936 empowered US federal regulators (now known as the Commodity Futures Trading Commission, or CFTC) to establish ‘position limits’ on ‘non-commercial’ traders who are not bona fide hedgers. Non-commercial traders are those who do not trade the actual commodity, such as speculators and banks. Commercial traders are those who are end-users of the commodity, such as farmers, grain elevator operators, food processors, and trading companies.
Position limits place a ceiling on the number of agricultural futures contracts a single non-commercial trader is allowed to hold. The purpose of the regulation was not to eliminate speculation, which is widely seen to perform a useful price discovery function. Instead, the idea is to prevent market manipulation and distortion by overly powerful speculators that could cause havoc for farmers, food producers, and consumers. The 1936 Act speaks of the objective of eliminating ‘excessive speculation’ that causes ‘sudden or unreasonable fluctuations or unwarranted changes’ in commodity prices.102
The regulatory framework in the USA began to soften when position limits were effectively relaxed over the 1980s and 1990s. In 1986 the US Congress directed the CFTC to consider including the use of future markets to manage financial investment portfolio risks in its definition of bona fide hedging. This request prompted the CFTC to issue a number of clarifications and interpretations that effectively expanded the definition to include trading strategies aimed at reducing financial risk.103 The CFTC also granted exemptions from speculative trading limits to a number of financial institutions starting in the 1990s.
Banks also began to request and were granted ‘no action letters’ from the CFTC. These letters provided regulatory relief by stating that the regulatory body would not recommend enforcement action against the requesting entity for failure to comply with specific CFTC rules or regulations if a proposed transaction or activities was completed by that entity. In requesting no-action letters, banks argued that they should not be subject to enforcement action because their hedges in commodity markets were hedges against real risks in financial markets. The relaxation of the rules by these various means in effect transformed banks and other financial services firms into commercial traders because they were treated similarly to end-users. With an effective exemption from position limits, banks began to sell directly a variety of financial products ‘over-the-counter’ (OTC), which means that they are not directly traded on commodity futures exchanges. Such products also include ‘commodity index funds’ (CIFs), which bundle together different kinds of commodities, including agricultural commodities. These trades were not regulated because they were not traded on an exchange, but banks were able to hedge the risk from the sale of those products on futures markets because of their exemptions from position limits.
The Commodity Futures Modernization Act (CFMA) was passed in the USA in 2000, legislation that exempted OTC derivatives trade from CFTC oversight. The OTC commodity derivatives trade, including CIFs, was not subject to any position limits under this regulation, nor any reporting requirements. The Act also allowed purely speculative trading in OTC derivatives. In other words, investments in these products were not required to be hedges against a pre-existing risk for either party. In effect, the CFMA codified what the no action letters had already established, limiting the oversight of the CFTC and opening the possibility of a much higher volume of speculative trading in commodity markets.
Trader firms already saw themselves as commercial actors, but in some cases they asked for exemptions from rules as well. In 2006, for example, Cargill requested exemptions from regulation from the CFTC for future sales of OTC agricultural derivative products to external customers by a new financial division of the firm. Cargill wanted to be sure that its subsidiary would be exempt from regulation if it became a separate agricultural trade options merchant. The CFTC granted ‘no action’ relief to Cargill for its soon-to-be-established subsidiary to act as an ATOM (agricultural trade options merchant – for which the rules state that the firm must be a producer, processor, or commercial user, etc.):
‘Clearly, as used in the agricultural trade options regulations, the phrase, “producer, processor or commercial use of, or a merchant handling” a commodity was intended to apply more broadly than to just first handlers of commodities. The division believes that the Applicant, as a wholly-owned subsidiary of a grain merchant such as Cargill, is an appropriate candidate for inclusion within that broader application of the “producer, processor…” category.’
The US regulatory context was important, as it applies to the most important agricultural commodity markets in the world, primarily the Chicago Mercantile Exchange Group, which includes the Chicago Board of Trade, the world’s oldest and largest futures and options market. There are, of course, other futures markets that specialize in specific agricultural products, including London’s Liffe, which specializes in coffee and cocoa, and the Bursa Malaysia, which focuses on palm oil. Some others have relatively small volumes and serve more local markets, such as the Tokyo Grain Exchange, the Brazilian Mercantile and Futures Exchange, and the Indian Multi-Commodity Exchange. In a regulatory sense, the USA had the most extensive regulation on commodity markets, but some light regulations existed in the EU. In the period prior to the 2008 financial crisis, the EU did not regulate OTC derivatives and applied only minimal regulations to commodity derivatives traded on exchanges.
After 2000, there was a massive increase in investment in OTC financial products linked to commodities, as well as an increase in the complexity and types of agricultural commodity derivatives available for investors. Between the start of 2005 and March 2008, commodity futures contracts held by investors worldwide doubled in value, to an estimated $400bn. The sharp increase in these kinds of investment was mainly attributable to large-scale investors such as hedge funds, sovereign wealth funds, pension funds, university endowments, and other institutional investors. Commodity index funds have been especially attractive to these typically long-term and passive investors because they require little knowledge of the physical markets. As commodity prices began to rise in the early 2000s, investment in these instruments grew from $15bn in 2003 to $200bn by mid-2008, more than a ten-fold increase. Holding investments in CIFs as part of a long-term passive investment strategy has, according to some analysts, the same effect as the hoarding of physical stocks, but in practice this hoarding of futures contracts is virtual. According to former hedge fund trader Michael Masters, ‘Index Speculators’ trading strategies amount to virtual hoarding via the commodities futures markets. Institutional Investors are buying up essential items that exist in limited quantities for the sole purpose of reaping speculative profits.’
About Louis Dreyfus
Louis Dreyfus was founded in 1851 in Alsace and is today headquartered in France. It is primarily a family-owned conglomerate, with about 20 per cent of its shares held by employees.
The firm had net sales of $34bn in 2009.
Louis Dreyfus’ commodities trading arm, LD Commodities, headquartered in the Netherlands, specializes in the merchandising of grains and oilseeds, coffee, sugar, wheat, and rice. LD Commodities is the world’s leading merchandiser of cotton and rice, and one of the largest producers of orange juice, accounting for 15 per cent of global production, largely derived from its ownership of 74,000 acres of Brazilian orange groves. Louis Dreyfus holds a leading position in the Brazilian ethanol market and owns the largest biodiesel refinery in the USA. This processes 50m bushels of soybean a year, producing up to 88m gallons of biodiesel for blending with conventional fuels and 1m tons of soy meal for animal feed. Louis Dreyfus’ energy trading enterprises operate independently from Louis Dreyfus Commodities and are managed separately.
AN OVERVIEW OF THE FINANCIAL SERVICES DIVISIONS OF THE ABCD FIRMS
Louis Dreyfus has long played futures markets to hedge its own risk. Because it discloses even less information than the other ABCD traders, there is very little publicly available information on its financial activities. In 2008, it began to offer its financial services to third parties, using the slogan ‘Monetize our expertise’.
Louis Dreyfus Commodities Alpha Fund In 2008 Louis Dreyfus Commodities set up a new agricultural commodity hedge fund, the Alpha Fund, focusing on agricultural products, specifically grains, oilseeds, sugar, coffee, and cocoa. The fund bets on the direction of prices and on the differences between future and spot prices for these commodities. This new fund was launched following the success of a Louis Dreyfus energy-based hedge fund in 2007. The Alpha Fund, which is based in the Cayman Islands, began with $100m in assets and grew by a factor of 20 within two years. Its return in 2010 was a whopping 17.3 per cent and it managed some $2bn in assets. The fund had become so large that in early 2011 it stopped accepting new investors.
Calyx Agro In 2007 LD Commodities established a new subsidiary whose purpose is to identify, acquire, develop, convert, and sell farmland in Brazil, Argentina, Uruguay, and Paraguay, for large institutional investment funds such as AIG. According to the New York Times, Calyx Agro is ‘buying tens of thousands of acres of cropland in Brazil with the backing of big institutional investors, including AIG Investments’.
The firm is seeking to expand its land portfolio and further develop its farming activities.
Calyx Agro has been the source of controversy recently, however, with the revelation that it applied to the World Bank’s private sector lending arm, the International Finance Corporation (IFC), for a loan of up to $30m to finance the expansion of its activities. If the loan had been granted, the World Bank would in effect have been promoting land grabbing by a major private grain trading firm as a financial investment for large-scale investors. This prospect prompted civil society groups from Latin America and around the world to issue an open letter to the IFC asking it to reject the proposal.
To be continued….
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- Louis-Dreyfus-Gruppe: Die eherne Zarin (bilanz.ch)
- Rising Commodity Prices Created Three Louis-Dreyfus Billionaires (forbes.com)
- Louis-Dreyfus looks to play the long game (ft.com)
- Louis-Dreyfus Widow Chairman Ousts Men Running Commodities Giant (bloomberg.com)
- Bunge Limited Completes Sale of Brazilian Fertilizer Business to Yara (prnewswire.com)
- Rains preceded record drop in U.S. corn, soy cash prices (uk.reuters.com)
- Hedge Funds Make Record Bearish Corn Bets on Supply: Commodities (bloomberg.com)
- Marubeni Seeks 20% of China Corn Imports Set to Surge in Decade – Bloomberg (bloomberg.com)
- UPDATE 1-ADM says in talks to sell cocoa business (xe.com)
- Tight U.S. crop supply squeezes ADM profits (news.yahoo.com)
- Swiss firm Afegra cuts trading after losing Iran cereals business (xe.com)
- Glencore Xstrata Malt Unit Sold to Cargill for $373 Million (blogs.wsj.com)