Grain traders and tractor manufacturers see shares fall

Bunge's share price fell by more than 17% and ADM also saw its shares fall in value by 12%.  Photo: Canva
Bunge's share price fell by more than 17% and ADM also saw its shares fall in value by 12%. Photo: Canva

For months it all seemed too good to be true for the large grain trading companies.

The turnover and profit of companies such as ADM and Bunge https://www.bunge.com/ increased due to a tight supply and high demand for agricultural commodities. Share prices also rose to record highs. However, that has come to an end in the past 2 weeks.

Shares fall

Bunge’s share price fell by more than 17% and ADM also saw its shares fall in value by 12%. Partly there are probably investors who have taken their profits. There has also been increased pressure on skyrocketing grain prices, which may affect expectations for Bunge and ADM.

Damage to grain terminals

In addition, a Bunge site in a port in the Ukrainian city of Mykolayiv was hit by a rocket attack last week. A location of grain trader Viterra was also hit. The port city normally accounts for about a quarter of the country’s grain shipments. Damage to major grain terminals would make it more difficult to restart overseas trade, which has largely been halted since the war in Ukraine. The Bunge location has been closed since February 24.

Agco lost 15%

Tractor manufacturers Agco and CNH Industrial also saw a sharp fall in prices for the first time in a long time. Agco lost nearly 15% and CNH Industrial nearly 12% in 2 weeks. John Deere also saw a drop of more than 7%. Concerns about a recession are also filtering through to manufacturers. Investment bank Morgan Stanley downgraded its ranking for an Agco stock. When a recession comes, companies will spend less and machine manufacturers will be affected.

The declines of the above companies weighed heavily on the Food&Agribusiness index. It fell by more than 6% in 2 weeks. That is considerably more than, for example, the AEX index, which fell by 3.2% and the S&P 500 (500 largest listed companies in the US), which remained more or less the same.

Not all bad news

However, there were also risers. For example, Südzucker https://www.suedzucker.de/en shares were worth more than 15% more due to positive quarterly results and increased forecasts for the entire financial year.
Kloosterman
Carolien Kloosterman Business editor
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