Fitch: Sustained Low Commodity Pricing Supporting U.S. Agribusiness Profitability
Fitch sees the current low pricing environment in key agricultural commodities - corn, soybeans and wheat -sustained into the coming year given abundant supplies and promising current crops. In this environment, Fitch expects the large agribusiness companies to benefit from increased capacity utilization from commercialization of promising harvests of major agricultural commodities.
Agribusiness is opportunistically utilizing presently strong cash flows resulting from lower working capital requirements to enhance geographic positioning and solidify portfolios with value-added products and services. Each agricultural commodity firm rated by Fitch has actively pursued acquisitions that have addressed growing consumer demand for healthy food products. Fitch sees continued asset purchases of the size easily managed through cash flows or short-term funding.