IDEAS home Printed from https://ideas.repec.org/a/spr/agrhuv/v34y2017i1d10.1007_s10460-016-9681-8.html
   My bibliography  Save this article

Cargill’s corporate growth in times of crises: how agro-commodity traders are increasing profits in the midst of volatility

Author

Listed:
  • Tania Salerno

    (University of Amsterdam)

Abstract

This paper proposes two interrelated arguments: first, it is argued that agro-commodity traders are uniquely placed at the crossroads of agricultural trade to benefit from agricultural commodity speculation; and second, that the networks constituting their operations are central to their hedging activities. The case of Cargill—the largest privately owned company in the United States and one of the largest agricultural traders in the world—is used to support this argument by unpacking its operations, structure, and hedging strategies. In order to connect the operations of Cargill to its speculating strategies, this paper first traces how agriculture and finance have become increasingly intertwined leading to heightened agricultural commodity speculation. Second, Cargill will be positioned within this process by analyzing how it has financialized its own strategies and its Corporate Platform. Third, Black River Asset Management, Cargill’s private equity arm, will be analyzed to show how it uses the information moving through Cargill’s Platform to engage in hedging and/or speculation.

Suggested Citation

  • Tania Salerno, 2017. "Cargill’s corporate growth in times of crises: how agro-commodity traders are increasing profits in the midst of volatility," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 34(1), pages 211-222, March.
  • Handle: RePEc:spr:agrhuv:v:34:y:2017:i:1:d:10.1007_s10460-016-9681-8
    DOI: 10.1007/s10460-016-9681-8
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10460-016-9681-8
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.

    File URL: https://libkey.io/10.1007/s10460-016-9681-8?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Irwin, Scott H. & Sanders, Dwight R. & Merrin, Robert P., 2009. "Devil or Angel? The Role of Speculation in the Recent Commodity Price Boom (and Bust)," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 41(2), August.
    2. Jennifer Clapp & Eric Helleiner, 2012. "Troubled futures? The global food crisis and the politics of agricultural derivatives regulation," Review of International Political Economy, Taylor & Francis Journals, vol. 19(2), pages 181-207.
    3. Scott H. Irwin & Dwight R. Sanders, 2010. "The Impact of Index and Swap Funds on Commodity Futures Markets: Preliminary Results," OECD Food, Agriculture and Fisheries Papers 27, OECD Publishing.
    4. Tania Salerno, 2014. "Capitalising on the financialisation of agriculture: Cargill’s land investment techniques in the Philippines," Third World Quarterly, Taylor & Francis Journals, vol. 35(9), pages 1709-1727, October.
    5. James Crotty, 2009. "Structural causes of the global financial crisis: a critical assessment of the 'new financial architecture'," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 33(4), pages 563-580, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Claudia Coral & Dagmar Mithöfer, 2023. "Contemporary narratives about asymmetries in responsibility in global agri-food value chains: the case of the Ecuadorian stakeholders in the banana value chain," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 40(3), pages 1019-1038, September.
    2. Loka Ashwood & Andy Pilny & John Canfield & Mariyam Jamila & Ryan Thomson, 2022. "From Big Ag to Big Finance: a market network approach to power in agriculture," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 39(4), pages 1421-1434, December.
    3. Justyna Agnieszka Franc-Dabrowskaa, 2019. "Crawling financialization in Central and Eastern Europe using the example of Agriculture," Economia agro-alimentare, FrancoAngeli Editore, vol. 21(3), pages 677-696.
    4. Janina Grabs & Sophia Louise Carodenuto, 2021. "Traders as sustainability governance actors in global food supply chains: A research agenda," Business Strategy and the Environment, Wiley Blackwell, vol. 30(2), pages 1314-1332, February.
    5. Alessandro Paolo Rigamonti & Giulio Greco & Mariarita Pierotti & Alessandro Capocchi, 2024. "Macroeconomic uncertainty and earnings management: evidence from commodity firms," Review of Quantitative Finance and Accounting, Springer, vol. 62(4), pages 1615-1649, May.
    6. Baines, Joseph & Hager, Sandy Brian, 2021. "Commodity Traders in a Storm: Financialization, Corporate Power and Ecological Crisis," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, issue Latest Ar.
    7. Newman, Susan & Van Huellen, Sophie, 2022. "Understanding commodity markets to effectively address price increases and volatility in a post-COVID-19 world," Working Papers 70, Austrian Foundation for Development Research (ÖFSE).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Baines, Joseph, 2017. "Accumulating through Food Crisis? Farmers, Commodity Traders and the Distributional Politics of Financialization," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 24(3), pages 497-537.
    2. Ludwig, Michael, 2019. "Speculation and its impact on liquidity in commodity markets," Resources Policy, Elsevier, vol. 61(C), pages 532-547.
    3. Boyd, Naomi E. & Harris, Jeffrey H. & Li, Bingxin, 2018. "An update on speculation and financialization in commodity markets," Journal of Commodity Markets, Elsevier, vol. 10(C), pages 91-104.
    4. Lang, Korbinian & Auer, Benjamin R., 2020. "The economic and financial properties of crude oil: A review," The North American Journal of Economics and Finance, Elsevier, vol. 52(C).
    5. Vijay Kumar Varadi, 2012. "An evidence of speculation in Indian commodity markets," EconStor Preprints 57430, ZBW - Leibniz Information Centre for Economics.
    6. Sean Field, 2016. "The financialization of food and the 2008–2011 food price spikes," Environment and Planning A, , vol. 48(11), pages 2272-2290, November.
    7. Scott H. Irwin & Dwight R. Sanders, 2011. "Index Funds, Financialization, and Commodity Futures Markets," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 33(1), pages 1-31.
    8. Bozic, Marin, 2011. "Three essays in commodity futures and options price performance," Faculty and Alumni Dissertations 160678, University of Minnesota, Department of Applied Economics.
    9. Apperson, George P., 2017. "Agricultural Commodity Futures Price Volatility: A Market Regulatory Policy Study," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258210, Agricultural and Applied Economics Association.
    10. Adjemian, Michael K. & Bruno, Valentina & Robe, Michel A. & Wallen, Jonathan, 2017. "What Drives Volatility Expectations in Grain and Oilseed Markets?," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258452, Agricultural and Applied Economics Association.
    11. Amedeo De Cesari & Maria Leone & Alberto Manelli & Roberta Pace, 2018. "The sustainability of the interaction between Financial and commodity markets," RIVISTA DI STUDI SULLA SOSTENIBILITA', FrancoAngeli Editore, vol. 0(2), pages 133-153.
    12. Bozic, Marin & Fortenbery, T., 2015. "Price Discovery, Volatility Spillovers and Adequacy of Speculation when Spot Prices are Stationary: The Case of U.S. Dairy Markets," 2015 Conference, August 9-14, 2015, Milan, Italy 211369, International Association of Agricultural Economists.
    13. Sophie van Huellen & Fuad Mohammed Abubakar, 2021. "Potential for Upgrading in Financialised Agri-food Chains: The Case of Ghanaian Cocoa," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 33(2), pages 227-252, April.
    14. Will Devlin & Sarah Woods & Brendan Coates, 2011. "Commodity price volatility," Economic Roundup, The Treasury, Australian Government, issue 1, pages 1-12, April.
    15. Balcilar, Mehmet & Ozdemir, Zeynel Abidin & Yetkiner, Hakan, 2014. "Are there really bubbles in oil prices?," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 416(C), pages 631-638.
    16. Haase, Marco & Seiler Zimmermann, Yvonne & Zimmermann, Heinz, 2016. "The impact of speculation on commodity futures markets – A review of the findings of 100 empirical studies," Journal of Commodity Markets, Elsevier, vol. 3(1), pages 1-15.
    17. Mayer, Herbert & Rathgeber, Andreas & Wanner, Markus, 2017. "Financialization of metal markets: Does futures trading influence spot prices and volatility?," Resources Policy, Elsevier, vol. 53(C), pages 300-316.
    18. Covindassamy, Genevre & Robe, Michel A. & Wallen, Jonathan, 2016. "Sugar With Your Coffee?: Financials, Fundamentals, and Soft Price Uncertainty," IDB Publications (Working Papers) 8588, Inter-American Development Bank.
    19. Duc Huynh, Toan Luu & Burggraf, Tobias & Nasir, Muhammad Ali, 2020. "Financialisation of natural resources & instability caused by risk transfer in commodity markets," Resources Policy, Elsevier, vol. 66(C).
    20. Baah Aye Kusi & Lydia Adzobu & Alex Kwame Abasi & Kwadjo Ansah-Adu, 2020. "Sectoral Loan Portfolio Concentration and Bank Stability: Evidence from an Emerging Economy," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 19(1), pages 66-99, April.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:agrhuv:v:34:y:2017:i:1:d:10.1007_s10460-016-9681-8. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.