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The article says bankruptcies have "increased steadily" since 2014. It does mention China, and the trade war, but I think when they say "falling commodity price

by latch 8y ago

The article says bankruptcies have "increased steadily" since 2014. It does mention China, and the trade war, but I think when they say "falling commodity prices" they are referring to a longer/broader issue. But it doesn't say why else commodity prices are falling, and I'm be happy if someone enlightened me.

caublestone 8y ago
The value of brand is rising which increases the prices paid by consumers for commodities. This makes people buy less of the underlying commodity and more of the overarching brand. Think about coffee. It’s a commodity. But more people are spending $4-5 on a single cup instead of $4-$5 on a pound of grounds. Spending power does not match price change. A good historical case study is Standard Oil. In an effort to stabilize prices and reduce peaks, Standard oil established last mile delivery for refined oil. People bought Standard Oil at the grocery store. Standard didn’t start buying oil wells until 20 years into the company after they had pressured prices down to the bottom.
- heavenlyhash 8y ago
  Grains are sold as a bulk commodity. The sale typically takes place at a "grain elevator" where the grain is dumped into a shared storage pool by the truckload. I'm not sure how anything about brands could apply. Any "brand" ends at the grate where you dump the grain. Similar with other ag products. Remember how we just had that E. Coli outbreak in lettuce and nobody had any idea for several days where exactly it came from, so they had to broadcast the warning across the entire nation?
FranOntanaya 8y ago
One issue that was talked about some years ago and has sort of fallen off the news cycle was overcapacity for maritime transport. That could have contributed to it, or maybe it's another symptom of the underlying cause. https://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=1587 https://unctad.org/en/pages/newsdetails.aspx?OriginalVersion...
fabianhjr 8y ago
It is known as the declining rates of profit. ( https://en.wikipedia.org/wiki/Tendency_of_the_rate_of_profit_to_fall https://en.wikipedia.org/wiki/Tendency_of_the_rate_of_profit... ) An oversimplified explanation would be that each buisness has an incentive to undercut their competitors and by doing so decline the profit margins for everyone.

by latch 8y ago

caublestone 8y ago

The value of brand is rising which increases the prices paid by consumers for commodities. This makes people buy less of the underlying commodity and more of the overarching brand. Think about coffee. It’s a commodity. But more people are spending $4-5 on a single cup instead of $4-$5 on a pound of grounds. Spending power does not match price change. A good historical case study is Standard Oil. In an effort to stabilize prices and reduce peaks, Standard oil established last mile delivery for refined oil. People bought Standard Oil at the grocery store. Standard didn’t start buying oil wells until 20 years into the company after they had pressured prices down to the bottom.

heavenlyhash 8y ago
Grains are sold as a bulk commodity. The sale typically takes place at a "grain elevator" where the grain is dumped into a shared storage pool by the truckload. I'm not sure how anything about brands could apply. Any "brand" ends at the grate where you dump the grain. Similar with other ag products. Remember how we just had that E. Coli outbreak in lettuce and nobody had any idea for several days where exactly it came from, so they had to broadcast the warning across the entire nation?

FranOntanaya 8y ago

One issue that was talked about some years ago and has sort of fallen off the news cycle was overcapacity for maritime transport. That could have contributed to it, or maybe it's another symptom of the underlying cause. https://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=1587 https://unctad.org/en/pages/newsdetails.aspx?OriginalVersion...

fabianhjr 8y ago

It is known as the declining rates of profit. ( https://en.wikipedia.org/wiki/Tendency_of_the_rate_of_profit_to_fall https://en.wikipedia.org/wiki/Tendency_of_the_rate_of_profit... ) An oversimplified explanation would be that each buisness has an incentive to undercut their competitors and by doing so decline the profit margins for everyone.