Wheat Flour

commodities, via a sea route. As the freight cost is usually high compared
with the price of wheat, delays in vessel loading due to poor logistics and
delays with grain fumigation, phytosanitary, procurement of quality certificates,
customs clearance, etc., may cost the grain trader USD 15,000–30,000 per
day depending on the type of vessel and the contractual arrangements. Thus,
a trader who expects to earn a USD 3/ton margin on shipping 30,000 tons of
wheat overseas can loose USD 0.50–1.00 in demurrage payments each day
the shipment is delayed.
3.6 Wheat traders’ margins
Grain trading is a low margin and high-volume business. Depending on wheat
prices, freight rates, currency exchange rates, existence of own elevator
and procurement (sourcing) network, government policies related to export
refunds (subsidies) and the terms of value-added tax (VAT) reimbursement,
wheat traders’ margins may be highly variable. It is believed that grain traders
who sell wheat from the Black Sea region earn on average USD 2–5/ton.
3.7 industry leaders in the grain trade
There has been some consolidation of the grain trading business due to
the mergers and acquisitions of the last ten years (Cargill’s purchase of the
Continental Grain merchandising business, completion of the Archer Daniels
and Midland (ADM) acquisition of A.C. Toepfer International, etc.). It is difficult
to rank the grain trading companies in terms of trade volume as most of them
do not declare grain trade volumes or separate wheat trade from their other
trading activities in coarse grain, oilseeds, vegetable oils or other commodities.
The leading grain trading companies in the world are believed to be Cargill,
Bunge, ADM (all United States companies) and Louis Dreyfus (French
company).
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