Agricultural commodity trader Bunge announced a loss for the first quarter of 2020. In addition, the global company lowered its earnings estimate for the whole of 2020 as the corona pandemic decreases the demand for fuel and the global food supply.
Demand for Bunges vegetable oils dwindled at the end of Q1 / 20 when the corona crisis forced restaurants to close and travel activities to be restricted. As a result, prices for ethanol fell and in Brazil the exchange rate of the local currency collapsed. The burdened Bunges sugar and bioenergy division.
Bunge's Q1 / 20 result does not include the period when the crude oil market collapsed, which also had an extremely negative impact on prices for biofuels. The quarterly loss already shows how the corona pandemic can shut down entire supply chains. This has been shown by the examples of the US meat industry, the bottleneck of containers or the closed biofuel plants.
Bunge is expecting further major challenges in the global food supply this year, as long as many consumers mainly have to get food at home.Lower demand for gasoline, influences on soybean oil demand from biodiesel manufacturers or sugar-based ethanol demand will still have an impact on Bunge's current financial year.
Competitor Archer Daniels Midland (ADM) referred last week to the dangers for the supply chains and does not want to provide a profit estimate for his privately owned company for the time being.
The long-running trade dispute between the United States and China had already reduced the margins of the world's major agricultural commodity traders in recent years.
Source
Hansa Terminhandel GmbH
