For Glencore’s Next Move – Watch Grains

In 2012 Glencore became one of the world’s top wheat traders with its purchase of Canadian grain handler, Viterra Inc. for US$4.8 billion, and last year the group posted an impressive $800 million increase in profits from its agricultural division. The company, that later became Glencore, entered the agriculture space in 1982 with the purchase of Dutch grain trader, Granaria Group. In later years, Glencore chief executive officer, Ivan Glassberg, built the commodity group’s global presence through more than 40 deals. Now, the industry is awaiting Glencore’s next move.

The company is a top three agricultural exporter in Australia, Russia, the EU and Canada, and a top two global wheat supplier with an 18% share in global wheat trade. But in the last 11 months the group has made only one acquisition, it’s most recent deal being the purchase of a 50% stake in an agricultural export terminal in northern Brazil from Archer Daniels Midland (ADM).

Despite being a global market leader, Glencore has no presence in the key U.S. market. Philippe de Laperouse, managing director of agribusiness consultant HighQuest Partners, LLC. and a former senior executive at Bunge tells Bloomberg News, “The U.S. has to be part of the portfolio of a global grain trader,” “Eventually, you need the U.S. corn, soybean and wheat.” So, how might Glencore to close its U.S. gap?

Some of the most-watched acquisition targets in the U.S. market include Kansas-based grain merchant Lansing Trade, co-owned by The Andersons and Macquarie Group Ltd, Bartlett Co. and Seaboard Corp, both in Kansas, Nebraska-based Scoular Grain, or even the Nasdaq-listed Ohio-based ethanol, grain, and plant nutrient group, The Andersons worth US$1.1 billion.