Sunday, November 21, 2010

George Soros et al Bet on Commodities Trader

From the Financial Times:

George Soros and other Wall Street investors are backing a US commodity merchant that is clawing its way into the ranks of the industry’s top trading houses.

The investors – not usually associated with the mundane work of moving and storing corn, fertiliser and crude oil – are betting a more crowded, richer planet will rely more on international trade to meet localised food and energy needs.

Gavilon, as the merchant is known, is this month expected to complete the purchase of grain handler DeBruce in a deal that will raise its grain storage capacity to 300m bushels, surpassing the US operations of Bunge, a New York-listed rival, and third only to Archer Daniels Midland and Cargill.

The expansion comes amid forecasts of a tightening balance of supply and demand. The US Department of Agriculture on Tuesday said global wheat and corn stocks were forecast to “drop significantly” everywhere but China, “wiping out nearly all the stocks build-up of the past several years”. World oil consumption is again on the upswing after two years of decline.

“It’s just a huge opportunity,” Greg Heckman, chief executive, told the Financial Times in a rare interview. “If you look at the thesis among our investors, what they saw in Gavilon was a commodity management platform that is positioned to help the global producers and consumers solve these challenges"....MORE