Glencore’s Bunge plan likely to encourage industry consolidation
Chicago — Commodity trader Glencore’s confirmation on Tuesday that it sought a tie-up with grains trader Bunge is likely to signal the start of a wave of consolidation and partnering in the industry, as middlemen struggle to make profits amid a huge global food glut. Bunge and other top grains traders — 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 to their crops amid sour prices. Their margins have thinned as food and feed companies see no urgency to buy, as supplies soar for their key ingredients. New competitors are emerging, as niche firms eat into the space occupied by the grains giants, to produce genetically modified organism (GMO) free, organic or other supplies that appeal to changing consumer tastes. Glencore made the first move when it said it approached Bunge, one of the world’s top grain trading houses, about a business combination. Bunge...
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