Unstable markets trigger ag upheaval | TSLN.com

Unstable markets trigger ag upheaval

Chris Clayton
DTN Ag Policy Editor

DTN file photoAn inability to deal with the margin calls on the futures market has led to financial trouble for three major agriculture companies.

OMAHA (DTN) — As some of the largest players in the ethanol, cotton and poultry industries suffer from the financial carnage of a volatile 2008, they share one thing in common that led to their downfall: an inability to deal with the margin calls on the futures market.

High-dollar commodities and market speculation during the spring and summer now result in speculation about survival of companies that include VeraSun, Paul Reinhart Inc. and Pilgrim’s Pride Inc.

Large ethanol producer VeraSun filed Oct. 31 for bankruptcy reorganization, and cited high-priced corn during the summer and futures-market exposure. VeraSun’s bankruptcy filing ripples through the biofuels industry, given that investors are already leery about the overall long-term strength of ethanol.

Paul Reinhart Inc., one of the nation’s largest cotton merchants, filed bankruptcy to reorganize last month, but after it failed to refinance the company, it now plans to liquidate its business. Reinhart, which began in Switzerland in 1788, kept accepting contracts from farmers last spring when cotton prices on the futures market spiked without fundamental cause. Lenders then pushed Reinhart out of hedge positions later on. The company and several lenders are now being sued by cotton growers.

Only recently, a member of the Fortune 500, Pilgrim’s Pride Inc., the nation’s largest chicken company, has avoided filing for bankruptcy but has month-to-month agreements from lenders and is now the subject of rampant speculation. The company has already eliminated several plants. Stock has fallen from $26.85 a share in early June to 84 cents a share closing on Nov. 7.

OMAHA (DTN) — As some of the largest players in the ethanol, cotton and poultry industries suffer from the financial carnage of a volatile 2008, they share one thing in common that led to their downfall: an inability to deal with the margin calls on the futures market.

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High-dollar commodities and market speculation during the spring and summer now result in speculation about survival of companies that include VeraSun, Paul Reinhart Inc. and Pilgrim’s Pride Inc.

Large ethanol producer VeraSun filed Oct. 31 for bankruptcy reorganization, and cited high-priced corn during the summer and futures-market exposure. VeraSun’s bankruptcy filing ripples through the biofuels industry, given that investors are already leery about the overall long-term strength of ethanol.

Paul Reinhart Inc., one of the nation’s largest cotton merchants, filed bankruptcy to reorganize last month, but after it failed to refinance the company, it now plans to liquidate its business. Reinhart, which began in Switzerland in 1788, kept accepting contracts from farmers last spring when cotton prices on the futures market spiked without fundamental cause. Lenders then pushed Reinhart out of hedge positions later on. The company and several lenders are now being sued by cotton growers.

Only recently, a member of the Fortune 500, Pilgrim’s Pride Inc., the nation’s largest chicken company, has avoided filing for bankruptcy but has month-to-month agreements from lenders and is now the subject of rampant speculation. The company has already eliminated several plants. Stock has fallen from $26.85 a share in early June to 84 cents a share closing on Nov. 7.

OMAHA (DTN) — As some of the largest players in the ethanol, cotton and poultry industries suffer from the financial carnage of a volatile 2008, they share one thing in common that led to their downfall: an inability to deal with the margin calls on the futures market.

High-dollar commodities and market speculation during the spring and summer now result in speculation about survival of companies that include VeraSun, Paul Reinhart Inc. and Pilgrim’s Pride Inc.

Large ethanol producer VeraSun filed Oct. 31 for bankruptcy reorganization, and cited high-priced corn during the summer and futures-market exposure. VeraSun’s bankruptcy filing ripples through the biofuels industry, given that investors are already leery about the overall long-term strength of ethanol.

Paul Reinhart Inc., one of the nation’s largest cotton merchants, filed bankruptcy to reorganize last month, but after it failed to refinance the company, it now plans to liquidate its business. Reinhart, which began in Switzerland in 1788, kept accepting contracts from farmers last spring when cotton prices on the futures market spiked without fundamental cause. Lenders then pushed Reinhart out of hedge positions later on. The company and several lenders are now being sued by cotton growers.

Only recently, a member of the Fortune 500, Pilgrim’s Pride Inc., the nation’s largest chicken company, has avoided filing for bankruptcy but has month-to-month agreements from lenders and is now the subject of rampant speculation. The company has already eliminated several plants. Stock has fallen from $26.85 a share in early June to 84 cents a share closing on Nov. 7.

OMAHA (DTN) — As some of the largest players in the ethanol, cotton and poultry industries suffer from the financial carnage of a volatile 2008, they share one thing in common that led to their downfall: an inability to deal with the margin calls on the futures market.

High-dollar commodities and market speculation during the spring and summer now result in speculation about survival of companies that include VeraSun, Paul Reinhart Inc. and Pilgrim’s Pride Inc.

Large ethanol producer VeraSun filed Oct. 31 for bankruptcy reorganization, and cited high-priced corn during the summer and futures-market exposure. VeraSun’s bankruptcy filing ripples through the biofuels industry, given that investors are already leery about the overall long-term strength of ethanol.

Paul Reinhart Inc., one of the nation’s largest cotton merchants, filed bankruptcy to reorganize last month, but after it failed to refinance the company, it now plans to liquidate its business. Reinhart, which began in Switzerland in 1788, kept accepting contracts from farmers last spring when cotton prices on the futures market spiked without fundamental cause. Lenders then pushed Reinhart out of hedge positions later on. The company and several lenders are now being sued by cotton growers.

Only recently, a member of the Fortune 500, Pilgrim’s Pride Inc., the nation’s largest chicken company, has avoided filing for bankruptcy but has month-to-month agreements from lenders and is now the subject of rampant speculation. The company has already eliminated several plants. Stock has fallen from $26.85 a share in early June to 84 cents a share closing on Nov. 7.

chris clayton can be reached at chris.clayton@dtn.com