You are here

UPDATE 2-Bunge exits sugar trading business, has 'interested parties' -CEO

(Adds comments from CEO, analyst)

By Tom Polansek and Chris Prentice

CHICAGO, Feb 14 (Reuters) - Bunge Ltd is exiting the
global sugar trading business and has identified "a few
interested parties" in the business as it moves to concentrate
on its grains and oilseeds operations, the company's chief
executive said on Wednesday.

Bunge is getting out of sugar trading and distribution after
reporting a fourth-quarter loss, which increased pressure on CEO
Soren Schroder to improve results at the 200-year-old
agricultural merchant that has received takeover approaches from
Archer Daniels Midland Co and Glencore Plc.

Schroder told Reuters he thinks Bunge's sugar trading
business should have value to other industry members.

"We've got a few interested parties so that will be our
first path of action," he said in an interview.

Schroder declined to name the interested parties.

Bunge is a major player in the global sugar industry, both
as a trader and as a producer.

Trading "was historically positive" for the company,
Citigroup analyst David Driscoll said on a Bunge conference
call. "I'm not exactly clear why you'd really want to shut that
one down," he said.

Bunge has been seeking to get out of the sugar milling
business in top-grower Brazil since 2013 as a supply glut has
pushed prices lower and made it tough for industry participants
to turn a profit. Its eight Brazilian mills can produce sugar
and ethanol and have a capacity of more than 20 million tonnes,
according to Bunge's website.

The milling business will "have its own direction" from the
trading business, Schroder told Reuters.

Bunge has struggled to generate enough gross margin to cover
costs in sugar, Schroder said on the conference call with
analysts. Last year was a tough year for traders and producers,
with raw sugar prices tumbling more than 20 percent.

"We simply decided that it was time to really focus on
what's core to us, which is agribusiness, foods, grains and
oilseeds and get on with it in a good way," Schroder said on the
call.

Large grain traders that make money by buying, selling,
storing and shipping crops have grappled in recent years with
global oversupplies. Thin margins have squeezed core commodity
trading operations, including those of ADM, Bunge, Cargill Inc
and Louis Dreyfus Co, which dominate the
grain industry and are known as the "ABCDs" because of their
initials.

Bunge has declined to comment on the takeover approach from
ADM, which wound down its global sugar trading in 2015 and sold
a Brazilian mill a few years ago. Bunge rebuffed Glencore's
approach last year.
(Reporting by Tom Polansek and P.J. Huffstutter in Chicago and
Chris Prentice in New York; Writing by Caroline Stauffer;
Editing by Alistair Bell and Tom Brown)

© Copyright Thomson Reuters 2018. Click For Restrictions - http://about.reuters.com/fulllegal.asp

Read more about

Talk in Marketing

Most Recent Poll

What best describes your approach to farmland right now?