Top Grains Traders Face Tough Choice

Bunge and other top grains investors — who make money by buying, selling, storing, shipping and trading crops – are struggling to adapt to a world of oversupply. Their supply chains have become snagged as farmers cling with their crops amid sour prices. Their margins have thinned as food and give food to companies see no urgency to buy, as products soar for his or her key elements. New competition are growing, as niche companies eat into the space occupied by the grains giants, to create GMO free, organic or other products that charm to changing consumer tastes.

Glencore made the first move when it said it approached Bunge, one of the world’s top grain trading homes, in regards to a business mixture. Bunge said it is not engaged in conversations with Glencore. The discussions between Bunge and Glencore’s agricultural device centered on a UNITED STATES partnership, not a sale of the whole company, according to the people familiar with the matter who requested anonymity to discuss it. Whether through partnership or outright consolidation, the grain trading sector is poised to end up being the latest to handle fundamental change in a stressed space.

Bankruptcy filings have been rising among U.S. The only other immediate hope to boost investors’ results? Inclement weather that would damage crops, cut supply and make trading profitable again after the large harvests have driven down prices and subdued volatility essential to earnings. Arlan Suderman, key commodities economist for brokerage INTL FCStone. Bunge Chief Executive Officer Soren Schroder said this month that the industry needed mergers and that Bunge could take the business lead. Bunge and competition Archer Daniels Midland Co took a beating in the stock market this month over concerns about international trading.

The other two major investors, Cargill Inc and Louis Dreyfus Corp, are privately held. 2.3 billion from the worthiness of ADM on May 2 when it said massive global grain stocks were making it difficult to turn a income trading grain globally. 1.2 billion when it reported a lower first-quarter profit sharply.

On Tuesday, Bunge stocks climbed more than 16 percent on phrase of Glencore’s strategy. Buenos Aires, where top traders have operations. The best investors have tried to diversify from goods into areas with higher margins. Still, ADM CEO Juan Luciano told an investor conference last week that the company may permanently lose a “layer of profitability” in its grain business due to large harvests which have hurt margins. An ADM spokesman also told Reuters last week the business’s global trade table suffered a little loss last year, a unreported details of its results previously.

Gertjan van der Geer, older investment manager at Pictet Asset Management, said he wants to see loan consolidation including Bunge and ADM to stabilize income. The firm manages ADM and Bunge shares. But a merger of any two of the four ABCDs could raise “enormous competition problems” with regulators in america, the European Union and emerging markets, said Peter Carstensen, who teaches antitrust at the University of Wisconsin Law School. Offers could be targeted at specific geographies or areas instead, bankers and analysts said. U or Dreyfus.S. grain handler Andersons Inc is actually a takeover target, analysts said.

This month, Dreyfus told Reuters it was focused on its primary business but will eventually consider joint endeavors. Andersons dropped to comment. Without offers, the industry is still left looking forward to a drought that could tighten up products. Additional reporting by Rod Nickel in Winnipeg, Karl Plume in Chicago, Hugh Bronstein in Buenos Aires, Gus Trompiz in Paris and Diane Bartz in Washington; Editing by P.J.

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