More Cargill shenannigans

Mon Aug 1 10:06:09 BST 2011

Hi

Interesting report form Bureau Investigates site (
http://thebureauinvestigates.com/ )and reprinted in yesterdays Torygraph re
the aid-assisted multinational GM dumpers and rainforest trashers etc.,
Cargill. Cargill also built  the UKs largest grain processing plant in
Manchester a few years back.. Capitalist scum with an unhealthy amount of
control of the food supply..  

Giant grain firm buys up all British wheat in unprecedented purchase
/Concerns that giant trading companies and financiers are distorting
commodity markets.

Wheat buy-up sparks price manipulation fears 

 Britain's most powerful grain company, jointly owned by Cargill and
Associated British Foods, bought and took delivery of all the available UK
feed wheat last month. 

In recent weeks, Frontier is believed to have taken physical delivery of
approximately 225,000 tonnes of feed wheat now worth in the region of £40m. 

By Nick Mathiason 

9:30PM BST 30 Jul 2011

The series of purchases by Frontier Agriculture, described by a number of
traders as "unprecedented", will reignite growing concerns among food
manufacturers and campaign groups over the potential for giant trading
companies and financiers with deep pockets to profit and even distort
commodity markets. 

Traders told the Bureau of Investigative Journalism that Frontier bought all
available May Futures contracts on the London International Financial
Futures and Options Exchange (Liffe) in the period running up to the tender
date in the last week of April. Feed wheat sets the benchmark price for
wheat used in food. 

In recent weeks, Frontier is believed to have taken physical delivery of
approximately 225,000 tonnes of feed wheat now worth in the region of £40m
in what has been described as an attempt to corner the market. 

Frontier strongly rejected any suggestion of an attempt to manipulate the
market. It did not confirm or deny it made the unusually large trades and
refused to reveal its position. The company's trading director, Jon Duffy,
stated that all the wheat contracts it took physical delivery for were made
to secure enough grain to fulfil customers' orders. 

"We are not speculators, said Duffy. "We are physical grain traders. We buy
about 5m tonnes of grain. We buy it, move it, transport it and deliver it." 

The spectacular grain raids, which are not illegal, were confirmed by three
leading wheat traders who spoke to the Bureau. 

But the move appears to have backfired. With wheat in short supply three
months before harvest, an unusually dry spell combined with a Russian export
ban imposed last August sent wheat futures spiralling. 

Frontier's purchase sent May Futures even higher compared with other
contracts. This could have created millions of pounds in profit for
Frontier. 

But the Russian government's announcement in May that it would lift its
export ban, much-needed rain and the temporary closure of a major
bio-ethanol facility on Teeside, which uses almost 100,000 tonnes of wheat
each month, led to a sudden price drop. This meant Frontier could have lost
between £5m and £10m on its acquisition, according to one senior grain
trader. 

Frontier said it sold on all wheat associated with this trade but would not
confirm whether it lost money. 

Wheat May futures on Liffe climbed from £153 per tonne in October last year
to over £222 in April. 

Deborah Doane, director of anti-poverty campaign group World Development
Movement, which has been a vocal critic of what it describes as opaque
commodity markets, said: "The end result of trades like this is a volatile
market that often has no connection to real supply and demand, wreaking
havoc on consumers in the UK and in poor nations. 

"The UK Government has turned a blind eye and has aimed to block European
proposals for regulating commodity markets that would bring this type of
profiteering to a halt even though the light touch approach to regulation
has been shown to be a complete failure." 

It is currently impossible to establish the identity of those who make large
commodity trades on Liffe. The identity of traders is only known by the
exchange and brokers. 

Huge financial players  whether they are hedge funds, index funds or giant
trading houses such as Cargill or Glencore  have come under growing
scrutiny in recent years as trading volumes have escalated sharply. 

This has sparked concern within the G20 that speculation is feeding
inflation and aggravating poverty in poor countries. And the European
Commission this autumn is expected to revise its Markets in Financial
Instruments Directive (MIFID), which has attracted a fierce lobbying drive
from banks trying to ward off expected greater transparency in derivative
markets across the EU. 

Later in the year, Liffe will introduce rules in London that will analyse
the proportion of soft commodities that is held by banks, index funds, hedge
funds and grain traders. It is also considering whether to introduce
position or delivery limits in soft commodity markets. 

Frontier, meanwhile, on revenues of £980m and profits after tax of £16.8m,
has grown swiftly in 10 years to become Britain's leading grain purchaser,
putting it ahead of Openfield, the UK's largest farmer-owned grain business,
Gleadell Agriculture and Glencore Grain. 

Frontier's Duffy says its market share is 23pc and that Frontier buys 5 m
tonnes of grain which also includes barley, oats and rapeseed each year. 

Duffy stresses that Frontier is independent of its powerful shareholders,
Cargill and Associated British Foods. Both shareholders own a number of
major food processing and biofuel facilities in Britain. This, suggest
farming insiders, has the potential for Frontier to exert significant
control on farmers and rival grain suppliers. 

- Nick Mathiason is a business reporter at The Bureau of Investigative
Journalism

The UK ( around  2009 ) produces around 15 million tonnes of wheat each year
and around 25% of this is exported to countries around the world. About 40%
of the national crop is used in animal feed rations going to chickens, cows
and pigs. The balance of the crop is used for human consumption with wheat
being used in literally thousands of products and responsible for the daily
production of 10 million loaves of bread. (http://www.ukagriculture.com). T

Though this is changing as the multinationals  move into bioethanol  and
Cargill has been buying up a lot of  biofuel business globally.
http://www.biofuelwatch.org.uk/docs/agrofuel_industry_in_the_UK.pdf

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