The biggest commodity trading firms in the world will require “raising extra cash and pulling in new investors” to survive, reported Bloomberg News March 26. “Smaller traders risk not surviving at all.” The news service reported that under the sudden shock of commodity hyperinflation, shortages and loss of liquidity, the biggest “traders are reducing their activity, which saps liquidity and threatens to only [sic] make markets more volatile.”
A meeting of executives of the top trading companies in Lausanne, Switzerland March 25 was the primary subject of the Bloomberg article. It reported that the companies are “struggling to keep up with huge cash requirements to back up positions or put on new ones,” including the giant Trafigura’s unsuccessful talks with Blackstone, Inc., Apollo Global Management Inc., BlackRock Inc., and KKR and Co., all in search of an infusion of $2-3 billion for preferred stock. Trafigura had to take on long-term debt instead. Englehart Commodities Trading Partners had to cut all its positions in half in energy and metals markets as liquidity disappeared; and so on.
