Falling Food Prices Hurting Farmers, Equipment Manufacturers

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Source: Novelis

Historically low food commodity prices are causing mayhem for farmers and equipment manufacturers as the decreasing returns on investment are keeping older equipment in the field and China has started stockpiling rare metals again.

Low Food Prices Hamstring Farm Equipment Manufacturers

The U.S. is on track this year to post the longest stretch of falling food prices in more than 50 years.

Two-Month Trial: Metal Buying Outlook

The trend is being fueled by an excess supply of dairy products, meat, grains and other staples and less demand for many of those same products from China and elsewhere due to the strong dollar.

Deere & Co. (maker of John Deere tractors and farm equipment) plans to cut additional production of its trademark green tractors and harvesting combines this fall in response to the continued downturn in the global farm economy as farmers are making due with their current machines due to low ROI on their crops.

The world’s largest maker of farm equipment by sales said the cuts will affect plants in Illinois and Iowa, blaming weak demand in North America and markets in Europe and South America for the moves.

China’s Stockpiling Rare Metals Again

China is stockpiling rare metals and curbing output to tighten global markets, pushing up prices of some materials despite sluggish underlying demand.

The metalloid antimony went for around $7,100 a metric on the London spot market in early August. This marked a climb of a little over 10% from a recent low in early June, as well as a one-year high.

Free Download: The August 2016 MMI Report

Over the past year, antimony has for the most part traded at $5,000 to $7,000 per mt, weighed down by sluggish demand and overproduction. China, which produces roughly 80% of the metalloid worldwide, has cracked down on smuggling and in early spring began using environmental regulations to halt operations at major producers. But this resulted in only a slight upturn in prices on the international market.

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