• Condensed by Lynda Kiernan

ABCDs No Longer King In Brazil

Analysis carried out by Reuters of ten years of shipping data from Williams Shipping Agency, indicates that the global ABCDs – Archer Daniels Midland, Bunge, Cargill, and Louis Dreyfus, have lost their majority share of the Brazilian grain export market to rapidly growing Asian rivals.

As China’s population increases and the country’s demand for grain grows along with it, these shifts are having a noticeable effect within the grain market in the world’s top exporting nation. In 2003, the ABCDs accounted for 57% of all grain purchases from Brazil, while Asian trader accounted for only 9%. However, last year Asian traders including COFCO purchasing 45% of Brazil’s soybean, soybean meal, and corn exports, with the ABCD traders taking a 37% share. Only two years ago, in 2014, the ABCDs purchased 46% of Brazil’s grain exports compared to 36% being bought by Asian traders. In 2016, as the ABCDs show flat growth, Asian traders including Japan’s Itochu, Agrex/Mitsubishi, Mitsui, China Agri, Noble Agri and NIdera, South Korea’s CJ, and Singapore-based Wilmar are all expanding their share of export purchases at a much faster rate.

This increased competition has resulted in increased crop production in Brazil over the past decade - more than doubling from 40 million tons of corn, soybean, and soymeal exports to approximately 98 million tons last year, according to data from the Trade Ministry. In turn, ample supply has led Asian traders to invest in infrastructure including ports and terminals to increase efficiencies in support of handling larger and larger volumes of grain, and to cut costs in a sector that typically works within tight margins.

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Lynda Kiernan is Editor with HighQuest Group Media and of the Oilseed & Grain News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@highquestgroup.com.

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