Commodity Execs To Their Sugar Businesses:
Cargill is taking its turn with one of the latest trends. And thankfully, it’s not anything like a corporate TikTok account.
The commodity giant is selling its stake in the world’s largest sugar trader, Alvean. The buyer? Cargill’s partner in the business and Brazil’s sugar giant, Copersucar.
Alvean was established in 2014 as a 50/50 joint venture between the two companies, and it’s been the king of the hill, responsible for 20% of global sugar trading.
So you mentioned a ‘trend’… Cargill credited the move to being part of a “portfolio review,” but it comes after several other powerhouses have dumped their sugar trading exploits in recent years.
- ADM was the trendsetter when they left the sugar trade game in 2016.
- In 2018, Wilmar International acquired Bunge’s sugar trading business.
- Global commodity trader Olam International emptied out its sugar trading desk in 2019.
- And earlier this year, U.S. Sugar agreed to buy Imperial Sugar from Louis Dreyfus Company.
The sell-offs are primarily due to sugar’s bumper crop status the past several years. With larger harvests, market prices were stable. And because market volatility is how traders make significant profits, many decided to exit those steady-state sugar businesses to invest elsewhere.
Zoom Out: Sugar trading is a huge business, with an average of 64 million tonnes exchanged on the global market every year. India and Brazil dominate sugar production, each producing over 29 million tonnes annually.