Chapter 332 - 332: The Tide (2)

The head-on collision of the iron ore war plunged BHP Billiton, Rio Tinto, and Vale into a crisis, facing pressure from both within and without.

Meanwhile.

The four great international grain traders—the ABCD companies—were also suffering heavy losses.

After Tianzhu reached an agreement with the Homo Sapiens Company, the latter dumped 37.5 million tons of grain into Tianzhu in less than a month, instantly shattering the upward trend of international grain prices.

Following that, the Suez Republic traded a port on the Red Sea and the 50-year operating rights to a railway in exchange for 5 million tons of blended flour (non-wheat) from the Homo Sapiens Company.

The oil-rich nations of West Asia also successively imported a total of 17 million tons of grain from the Homo Sapiens Company.

Faced with the Homo Sapiens Company's massive flood of supply and vast quantities of low-priced grain, the global food crisis seemed to vanish overnight.

The ABCD companies, however, were not happy about the low-priced grain.

After all, their soybean and corn production had been severely reduced, and they had been counting on high prices to recoup their losses.

But now, the Homo Sapiens Company had crashed the market, leaving them no chance to recover. It was tantamount to driving them out of business.

At the Sydney branch of Bunge in Kangaroo Country.

An emergency meeting was in progress.

Branch Manager Helen Sax, along with Head of Marketing Lawrence and Head of Warehousing Jack Smith, all had grim expressions as they stared at the data charts on the projection screen.

Lawrence pointed to a pie chart of their inventory. "We currently have 7.5 million tons of wheat and 2.43 million tons of barley in stock. Selling the barley isn't a major issue; several breweries in Germany, Britain, and Western Rome have already sent us inquiries."

But this so-called good news brought no joy to Manager Helen. She ground out through clenched teeth:

"The international price for wheat has already dropped to 330 US Dollars per ton. We've lost at least 4 billion US Dollars! Damn that Homo Sapiens Company!"

As the head of marketing, Lawrence understood their company's current situation even better. "We have only two options now. One is to wait until next year and see if the price rebounds. The other is to sell at a reduced price."

"No! I'm against waiting for the price to rebound next year." Jack Smith's face was stern. "Do you really think the Homo Sapiens Company is going to cut production next year? No, they'll continue to increase production. Wheat prices will only be lower next year."

Helen thought for a moment before asking, "Jack, why do you think the Homo Sapiens Company will increase production next year?"

"Haven't you noticed? The agriculture on Mad Island is already under the control of the Homo Sapiens Company. And the tropical savanna in the west of Mad Island, as well as the central highlands, are both well-suited for growing wheat."

As he spoke, Jack Smith pulled up a physical map of Mad Island on his laptop.

"Look. Given the Homo Sapiens Company's technology and development speed, it's estimated that they could develop tens of millions of hectares of wheat fields on Mad Island. This means that next year, the Homo Sapiens Company's wheat production could very well increase by over a hundred million tons."

Hearing this number, Helen couldn't stay seated. "Over a hundred million tons?"

The figure seemed outlandish, but Helen had no choice but to believe it. After all, the Homo Sapiens Company had produced 47 million tons of wheat from just two tropical highland areas: Cianlan Island and the Shan Plateau.

And Mad Island is also a tropical region with both highlands and hot, arid savannas. Its potential arable land area is even more extensive, and its agricultural production potential cannot be underestimated.

What's more, the Homo Sapiens Company's agricultural technology is also incredibly advanced.

The thought made Helen so anxious she started chewing on her pen.

"Manager Helen, we should sell off this stockpiled wheat as soon as possible! At 330 US Dollars a ton, we can still make a profit of at least 30. If the price continues to fall..." Jack Smith urged.

But Lawrence just gave a wry smile. "Jack, you're being too naive. If we sell now, it will cause wheat prices to fall even further."

The international market price for wheat was currently holding at 330 US Dollars per ton only because the ABCD companies had been hoarding their supply, hoping to drive the price up. They never expected the Homo Sapiens Company to be so ruthless and smash the price down in one fell swoop.

If the ABCD companies also start selling off their stock now, it will definitely cause international grain prices to drop further.

At that point, as soon as the price falls below 300 US Dollars per ton, it means their wheat has dropped below its cost price.

This was why Helen found it so difficult to make a decision. She figured headquarters was also agonizing over this very issue.

Matching the Homo Sapiens Company's price would trigger a chain reaction in the market. They might even end up losing money on their sales.

But not matching their price would cause other grain-importing nations to turn to the Homo Sapiens Company, and their grain would just have to sit in the warehouses.

Regarding continued storage, Jack Smith also had something to say.

The grain warehouses here in Kangaroo Country are categorized. There are strategic storage warehouses that can store grain for about five years, medium-term warehouses for about three years, and short-term depots that can only store it for one year.

Since Kangaroo Country has a very high grain output, there's naturally no need for a large number of strategic, long-term warehouses. After all, the construction and maintenance costs for long-term facilities are quite high, and capitalists certainly wouldn't build many of them.

As a result, the vast majority of warehouses in Kangaroo Country are simple, short-term depots that can only store grain for about a year.

In the past, this was never a problem. High-quality wheat from Kangaroo Country was often in high demand.

But now, it had become a huge problem.

7.5 million tons of wheat is no small amount. If it can't be sold soon, there are only two paths forward: either let it rot in the warehouses, or upgrade the warehouses to extend the storage limit to two or three years.

Now, Bunge Company was caught in a dilemma.

Selling would cause the market price to fall further, ultimately turning it into a loss-making business.

Not selling meant it would either rot or they would have to spend money upgrading the warehouses.

Neither option was a good one.

At a loss, Jack Smith asked with a troubled look, "Lawrence, do you have any ideas then?"

Lawrence threw up his hands, his expression one of complete helplessness. "I don't have any ideas either. The key issue now is that the Homo Sapiens Company is dumping grain at low prices. We've been backed into a corner."

Jack Smith racked his brains, and a thought suddenly occurred to him. "Could we go to the World Trade Organization and demand that the Homo Sapiens Company stop its low-price dumping?"

To this, Lawrence shook his head with a look of resignation. "The Homo Sapiens Company isn't even a WTO member. They don't have to abide by WTO trade rules. Besides, the Homo Sapiens Company has always been domineering; they couldn't care less what the WTO thinks."

Helen, who had bitten an indent into the end of her pen, sighed. "HUFF... Let headquarters decide. There's nothing we can do."

Lawrence nodded. "Something like this really should be left to headquarters. We're in no position to make a decision right now."

Helen quickly wrote up the report.

Archer Daniels Midland, Cargill, and Louis Dreyfus, who were also being squeezed by the Homo Sapiens Company, likewise had high levels of grain inventory due to their earlier strategy of hoarding.

Looking around, there were few buyers in the entire world who could absorb their grain stockpiles.

Of course, if they sold at a low price, the Far East Region would certainly import in large quantities.

The problem was, the ABCD companies weren't willing to accept it!

If they sold their stockpiled grain at a low price, they would incur significant losses. For them, that was worse than death.

They could have made tens of billions of US Dollars, but now, not only were they not making any money, they were very likely to suffer losses. It wasn't just the ABCD companies that couldn't accept it; no one could.

But time was not on their side.

The longer this dragged on, the more disadvantageous it would become for the ABCD companies.