World Grain - May 2013 - 78

FEATURE

Giant energy trader
enters global grain market
V

itol, one of the world’s largest independent energy traders has announced that it has started trading in global
grain markets. The Rotterdam, Netherlands-based company will eventually trade from Europe, North America and
Southeast Asia with a team including recruits from Canadian
trader Viterra.
The move highlights how commodity trading has become
big business. The Financial Times newspaper recently came
up with a ﬁgure of $243.6 billion for the net proﬁt of the top
20 commodities traders in 2003 to 2013, a level which outstrips the income for the top car makers, Toyota, VW, BMW,
Renault and Ford, in the same period as well as that of the
top Wall Street banks, JPMorgan Chase, Goldman Sachs and
Morgan Stanley.
Vitol will trade grain and other agricultural commodities globally from Singapore and
Geneva, Switzerland supported by
teams based in Vancouver, British
Columbia, Canada and Hamburg,
Germany (from May 2013), the company announced. The global team is
headed by Don Chapman, based in Vancouver. Previously
Chapman was senior vice-president with Viterra. He joined
Viterra in 2007 from Toepfer International.
‘NATURAL EXTENSION’
“Trading agricultural products builds on our core strengths
in logistics and understanding of global markets,” said Ian
Taylor, president and chief executive ofﬁcer of the Vitol
Group. “This is a natural extension for the business, and we
are pleased to welcome this experienced and proven team to
Vitol.”
Steve Mercer, U.S. Wheat Associates vice-president of communications, noted that expanded trade in wheat will mean
more opportunities for trading companies in future years.
“When we look at wheat we look out to 2030 and 2050,”
78

by Chris Lyddon

Vitol calls the move ‘a natural
extension’ for its business
he said. “Of course, production has to increase and the world
trading of wheat has to increase even more, potentially even
double. The wheat will need to move from where it is grown
to where it’s needed most where it can’t be grown, which is
the middle latitude where population is expanding the most
but production has not been able to keep up.
“It makes total sense that an organization like that would be
interested in expanding. The turnover
in that business is going to grow.”
Jack Watts, senior analyst at the
U.K.’s Agricultural and Horticultural
Development Board, identiﬁed two
possible motives.
“Is it purely from a speculative point of view?” he wondered. “Are they looking to beneﬁt purely from futuresbased trading of the quality in order to make the most of
the volatility? Or are they looking to be more involved in
the physical merchandising of the commodities, which to
my mind are both logical arguments given the nature of
the market?
In the energy markets, Vitol stresses the physical side. “Ours
is primarily a physical distribution business and one that operates on a truly global scale,” the company says on its website.
“We identify imbalances between supply and demand, and we
act quickly and safely to restore the equilibrium.
“We are not speculators on absolute price movements, nor
do we expose ourselves or our customers to unnecessary risks.
Rather, we use our worldwide reach, local understanding and
May 2013 / World Grain / www.World-Grain.com

http://www.World-Grain.com

World Grain - May 2013

Table of Contents for the Digital Edition of World Grain - May 2013