Alaco was quoted today in Bloomberg's commodities wire service.
Dreyfus Joins Glencore to Trafigura in Commodity-Storage Buying
2014-02-18 17:18:29.230 GMT
By Isis Almeida and Agnieszka Troszkiewicz
Feb. 18 (Bloomberg) -- Louis Dreyfus Commodities BV joined
trade houses including Glencore Xstrata Plc and Trafigura Beheer
BV in acquiring commodity warehouses licensed by exchanges.
The Rotterdam-based company, which owns 12 coffee storage
facilities around the world, said yesterday it bought Ilomar
Holding NV, owner of NYSE Liffe-approved cocoa and coffee
warehouses. The newly acquired company will retain commercial
and managerial autonomy, according to Jean-Marc Foucher, chief
executive officer of Louis Dreyfus Commodities for Europe and
the Black Sea.
Glencore, Trafigura and Noble Group Ltd. acquired warehouse
companies that are part of the London Metal Exchange’s network
to store industrial metals in 2010, as did Goldman Sachs Group
Inc. Mercuria Energy Group Ltd., an energy and metals trader, is
in final talks to buy physical commodities assets from JPMorgan
Chase & Co., owner of depot keeper Henry Bath & Son Ltd., which
stores metals, cocoa and coffee.
“We cannot say whether this deal is part of a trend in the
soft markets but it definitely follows the trajectory set in
metals,” Nikos Asimakopoulos, a senior associate in London at
business intelligence company Alaco, who researched the role of
coffee and metals warehouses in futures markets, said by e-mail
today. “It also makes commercial sense: Ilomar secured a
significant portion of its business through Louis Dreyfus.”
Supply Chain
Ilomar, which owns 4STOX NV, formerly known as Port Real
Estate NV, and Molenbergnatie NV, manages more than 400,000
square meters (4.3 million square feet) of warehousing space
worldwide. It has facilities in Belgium, Spain, the U.S. and
Vietnam, the world’s leading producer of the robusta coffee
variety used by Nestle SA to make instant drinks. The
acquisition fits with Louis Dreyfus’s plans to expand its fixed
assets and provide customers with a range of supply chain
services, Foucher said yesterday in a statement.
“We are investing in the holding company and expect that
the existing management, in whom Louis Dreyfus Commodities has
complete confidence, will continue to develop the business in
new geographies to serve the supply chain management
requirements of their customers,” said Foucher.
Molenbergnatie owns depots approved by NYSE Liffe to store
coffee and cocoa at the port of Antwerp in Belgium and coffee in
Barcelona, while 4STOX has sheds in the Belgian port, according
to data on the exchange’s website. About 84 percent of all the
coffee and 61 percent of the cocoa certified to be delivered
against the bourse’s futures contracts are stored in Antwerp.
Ilomar will also handle commodities including sugar, metals,
grains, frozen orange juice and nuts, Louis Dreyfus said in an
e-mailed response to questions.
Exchanges Link
“There’s a trend by traders to integrate further to reap
the benefits of a fully vertical infrastructure and if
warehouses are linked to the exchanges, their value is even
higher because you own part of the infrastructure where a lot of
volumes are concentrated,” said Diego Valiante, head of capital
markets at the Center for European Policy Studies in Brussels.
“If you own part of that infrastructure, you are betting on the
fact that these futures contracts will become even more central
to the pricing of commodities.”
Glencore, the largest listed commodity trader, took over
Pacorini Metals and Trafigura acquired NEMS, now known as Impala
Terminals U.K. Ltd. Noble owns Worldwide Warehouse Solutions
U.K. Ltd. and Goldman Sachs purchased Metro International Trade
Services LLC. JPMorgan took control of Henry Bath on acquiring
units of RBS Sempra Commodities.
Wait Times
Louis Dreyfus’s acquisition follows proposed changes to
warehousing policy by NYSE Liffe and the LME after traders and
consumers complained of lengthy wait times for deliveries. The
LME, the biggest metals bourse with a network of more than 700
warehouses, will require operators with queues exceeding 50
calendar days to remove more metal than they take in. NYSE Liffe
will give 60 days for depots to load out robusta coffee and
cocoa. Rules for both will become effective on April 1.
Aluminum consumers including brewer MillerCoors LLC said
last year that lengthy waits for metal inflated costs by $3
billion. Novelis Inc., an Atlanta-based aluminum parts maker
whose customers include Coca-Cola Co. and Ford Motor Co. said
last year the ownership of warehouses by banks and trading
companies created an imbalance in the marketplace.
In 2012, Armajaro Trading Group, a supplier of cocoa and
coffee in London, complained to the competition authority in
Belgium about lengthy wait times to receive coffee stored at
Wilmarsdonk, a Port Real Estate depot in Antwerp. A year
earlier, a court told Wilmarsdonk to accelerate deliveries of
coffee to Antwerp-based Sucre Export SA, today known as Group
Sopex SA.