LAUSANNE Glencore does not see further consolidation in agricultural commodities as straightforward and views a U.S. acquisition as less crucial than in the past, the group's agriculture chief said on Tuesday.
The diversified trading and mining group had pointed to the possibility of making bolt-on acquisitions after posting improved results for 2016 and there has been regular speculation that it was looking at the U.S. grain sector because of its limited presence there.
Glencore, which became a major international grain trader through its 2012 takeover of Canadian-based Viterra, sold 50 percent of its agriculture business last year to two Canadian investment funds.
"I think the industry needs consolidation but in practice it's easier said than done," Glencore Agriculture CEO Chris Mahoney told the FT Commodities Global Summit in Lausanne.
Mahoney said that deals among the biggest global traders, such as Archer Daniel Midland, Cargill and Bunge, could come up against regulatory constraints on competition grounds while smaller players are less attractive.
"If you drop down a tier, some of the smaller companies, if you were an acquirer, don't necessarily have what you would like. They don't have big assets in the right locations," Mahoney said.
Glencore's preference is for physical assets with an export focus, but a shift in agricultural commodities away from trading toward processing and logistics makes it less critical to buy assets in the United States, he said.
"I think the U.S. was probably more important for us 10-15 years ago than it is today," he said. "But it is still the world's biggest exporter. If could find the right thing at the right price, maybe, but that's already quite a challenge."
Agricultural commodity trading firms are emerging from a tough couple of years in which high supply and low volatility have cut margins and prompted some to shrink their trading desks and put some assets up for sale.
(Reporting by Gus Trompiz; Editing by David Goodman)