GLENCORE is the front-runner for any potential takeover of Viterra, which could benefit South Australian growers, ProFarmer's Malcolm Bartholomaeus says.
"If we look at Glencore, they currently have 15 per cent of national wheat exports and Viterra has 12pc," he said.
"If a merger was to happen, they would move to market share of 28pc, making them the biggest single exporter out of Australia. But, it wouldn't leave them too big compared to CBH, GrainCorp or Cargill, who are the next three largest exporters.
"So, nationally, the system is looking reasonably balanced."
But it was a different outlook for wheat exports from South Australia.
"When you look at SA, Viterra has 30pc of the market and Glencore 19pc," he said.
"So, you could say both companies are over-represented in SA compared to national figures.
"If you combine the two it would be close to 50pc market share of wheat exports from SA.
"Cargill would then be the only other single exporter above 20pc."
Mr Bartholomaeus said this scenario raised the question of whether that left one entity too dominant in the SA market.
"If you look at the barley market in SA, Viterra exports 50pc," he said. "But feed barley prices in SA seem to be fully competitive with prices elsewhere in the country.
"I don't know if having one player with 50pc market share is that bad, as long as there are at least another two players that are holding significant percentages of stock and there are enough smaller players to chip around the edges."
If Glencore was to takeover Viterra, it would give them a whopping 66pc of the barley market share in SA.
But, Mr Bartholmaeus said this would not necessarily be a bad thing.
"Glencore may well decide not to retain Viterra's malt assets," he said. "Glencore is a commodity trader, manufacturing isn't really a part of its core business."
If Glencore were to sell the malt assets, it could add competition to the malt market. Viterra currently dominates the SA malt market because it owns the assets and the storage and handling facilities.
"A merger with Glencore could break the malting market open in SA, or at least cut some of those linkages," Mr Bartholomaeus said. "It could open the malt barley market more to other exporters."
If Cargill bought Viterra, the combined entity would have 34pc market share of the national wheat market.
"So, that's still not too bad from a national perspective, it shouldn't really impact competitiveness in the wheat market," he said.
"The crunch comes when you look at the wheat market in SA, with Viterra having 30pc market share and Cargill 23pc."
A combined Viterra/Cargill entity would move to 53pc market share. But, that was not too different from a Glencore/Viterra merger, which would be close to 50pc.
*Full report in Stock Journal, March 15 issue, 2012.
"If we look at Glencore, they currently have 15 per cent of national wheat exports and Viterra has 12pc," he said.
"If a merger was to happen, they would move to market share of 28pc, making them the biggest single exporter out of Australia. But, it wouldn't leave them too big compared to CBH, GrainCorp or Cargill, who are the next three largest exporters.
"So, nationally, the system is looking reasonably balanced."
But it was a different outlook for wheat exports from South Australia.
"When you look at SA, Viterra has 30pc of the market and Glencore 19pc," he said.
"So, you could say both companies are over-represented in SA compared to national figures.
"If you combine the two it would be close to 50pc market share of wheat exports from SA.
"Cargill would then be the only other single exporter above 20pc."
Mr Bartholomaeus said this scenario raised the question of whether that left one entity too dominant in the SA market.
"If you look at the barley market in SA, Viterra exports 50pc," he said. "But feed barley prices in SA seem to be fully competitive with prices elsewhere in the country.
"I don't know if having one player with 50pc market share is that bad, as long as there are at least another two players that are holding significant percentages of stock and there are enough smaller players to chip around the edges."
If Glencore was to takeover Viterra, it would give them a whopping 66pc of the barley market share in SA.
But, Mr Bartholmaeus said this would not necessarily be a bad thing.
"Glencore may well decide not to retain Viterra's malt assets," he said. "Glencore is a commodity trader, manufacturing isn't really a part of its core business."
If Glencore were to sell the malt assets, it could add competition to the malt market. Viterra currently dominates the SA malt market because it owns the assets and the storage and handling facilities.
"A merger with Glencore could break the malting market open in SA, or at least cut some of those linkages," Mr Bartholomaeus said. "It could open the malt barley market more to other exporters."
If Cargill bought Viterra, the combined entity would have 34pc market share of the national wheat market.
"So, that's still not too bad from a national perspective, it shouldn't really impact competitiveness in the wheat market," he said.
"The crunch comes when you look at the wheat market in SA, with Viterra having 30pc market share and Cargill 23pc."
A combined Viterra/Cargill entity would move to 53pc market share. But, that was not too different from a Glencore/Viterra merger, which would be close to 50pc.
*Full report in Stock Journal, March 15 issue, 2012.
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