Category: Blog

Within the next five years, all international deals for commodity trading will run on stablecoins.  – Tether CEO, Paolo Ardoino

Good morning, Remi. Please tell me about yourself.

I’m French but was born in Senegal, West Africa. I spent part of my youth in East Africa, in Djibouti and Ethiopia, and the rest of my early life mainly in France. I have spent the past 25 years in South Africa. I’m married; my wife is English, and we have three boys.

After graduating from the French business school ESSEC, I began my career in 1985 in London, working in the financial markets, with a focus on swaps, options, and Treasury bonds. My ambition was to move into commodities, so when I had the chance to join Dreyfus in Paris in 1987, I seized it. I worked there for four years but decided the grass was greener elsewhere, so I left Dreyfus for a few years. They invited me back in 1994 to join their team in Madrid, where I was head of trading for Spain and Portugal. In 1998, Dreyfus transferred me to Johannesburg, South Africa, as an expatriate. I enjoyed the experience and chose to stay.

I spent ten years in Johannesburg, expanding the business from a small venture to over 50 staff and multiple offices. We traded mainly agricultural commodities with a regional focus.

In 2008, I decided to leave Dreyfus and return to Europe for family reasons. South Africa was not the best place at that time to educate three boys. I moved back to Europe, specifically to Barcelona, where I managed several food security initiatives with Morgan Stanley, as well as biotechnology projects.

And very quickly, Africa called me back. By 2011, I was back in Johannesburg, working for Ameropa and setting up a grain and fertiliser operation. In 2013, I joined my former colleagues from Dreyfus to establish a new venture, Englehart Commodities, under BTG Pactual Investment Bank’s management. It was an interesting experience.

I’ve loved commodity trading all my life, but over the past decade I’ve seen margins gradually shrink as the market has become more transparent.

It became increasingly difficult to make money: the FOB seller would sell C&F, and the C&F buyer would buy FOB. The way traders operated was being challenged, and it was becoming more necessary to take a flat price position and incorporate it into a physical portfolio to gain a market edge.

In 2017, while I was still with BTG Pactual, I attended a conference in Tanzania, where I met one of the largest wheat importers. I asked whether he was buying wheat. He told me to join the queue behind Cargill, ADM, and everyone else. However, when I mentioned I had finance, he immediately asked me to come to his office the next day. I suddenly realised I had possibly been trading the wrong commodity for the previous 20 years. Finance was the most in-demand commodity in Africa.

I shifted to trade finance and joined the Barak Fund, then the largest trade finance fund in Africa, which at its peak managed $1.3 billion in assets. I managed one of their smaller funds, combining traditional short-term credit and profit sharing with traders. I left them in 2023 after a restructuring of the fund. Still, I continued working in African finance, operating at the intersection of trade finance and commodity trading, with a strong interest in new technology and digitalisation.

You recently spoke at two conferences in South Africa, where you estimated the funding gap for small and medium-sized trading firms at around $200 billion. How did you arrive at that figure?

The African Development Bank and associated studies estimate Africa’s trade finance gap before COVID at around USD 80-120 billion annually, although it has expanded over the past decade. More recent figures cited by AfDB mention a gap of over $120 billion each year. I believe it exceeds that. I receive several requests each week for credit and short-term finance in Africa.

Why does that gap exist?

Banks are generally risk-averse and often lack the technical expertise and appetite to structure smaller transactions. They tend to focus on larger deals because the time spent remains the same whether financing a $5 million or a $50 million deal. From a purely asset- and resource-allocation perspective, banks rarely consider anything below a $10 million ticket size.

That’s where a prime opportunity exists for private credit and private funds. Currently, about a dozen funds operate in Africa, mostly managed from Geneva, London, or Dubai. Few operate directly on the ground.

You must realise that in Africa, appearances can be misleading. It presents a challenge for banks or traditional institutions. This is where trade finance can be effective: you don’t finance the balance sheet; you finance the asset. However, Africa’s logistics and value chains can be problematic. If you asked me today whether I could finance copper for a thi^rd party in the DRC or Zambia, I would say no. It’s too risky. Too little control, too much fraud.

Promoters of stablecoins argue they can be useful when US dollars are scarce in these countries. I find that difficult to understand because you need dollars to initially purchase stablecoins.

You don’t always need dollars; you can use local currency to acquire stablecoins through exchanges or OTC desks. Stablecoin operators can establish a liquidity pool and must comply with local regulations. What stablecoins actually address is not dollar scarcity itself, but the inefficiency of dollar distribution and reuse. By enabling instant, borderless settlement, the same pool of dollar liquidity can circulate more quickly and support far more transactions than in traditional banking systems.

But that’s not the main reason for their interest. The value of stablecoins lies in their transparency, speed, and low cost.

Can they avoid forex controls?

No, but liquidity providers, exchanges, and OTC desks must supply the necessary documents for exchange control purposes. Stablecoins don’t eliminate foreign-exchange controls, but by transferring money outside the banking system, they make these controls harder to enforce; they shift enforcement from transaction-level to access-point controls.

Even so, are you bullish on stablecoins?

Yes, very much so. Tether’s CEO has predicted that within the next five years, all international commodity trading deals will be conducted using stablecoin. Commodity trading faces issues with cash flow, trust, and timing. Stablecoins address all three: quick settlement, global liquidity, and no downtime. For anyone involved in commodities who is tired of paperwork and payment delays, this will be a significant relief.

Today, traditional finance and payment channels (TradFi) are increasingly struggling to fulfil this role.

How might things evolve?

It will be driven from the bottom up, starting with on-the-ground operators. I already have clients operating in stablecoins, some to avoid dollar payments passing through American banks.

If you’re a trader in the Ivory Coast or Morocco and want to make or receive a payment, or receive a USD payment, you might be concerned that your funds will need to be cleared by the corresponding bank in the US. There is a move to diversify away from the US dollar, which has become increasingly problematic and risky for certain operators. Even if they are fully compliant and do nothing wrong, they still want to avoid the risk.

DeFi will present a major challenge for banks, leading to revenue loss.

Which countries in Africa would be your initial targets: West African cocoa or East African coffee?

It will be a country where the concept of stablecoins is already accepted, a digitally friendly and educated nation, such as Kenya, South Africa, or perhaps Rwanda. Nigeria is already experienced with crypto and digital assets, although the transactional side remains somewhat challenging.

I am collaborating with a small group of partners to launch a venture that will pilot a new transaction model with the potential to transform commodity trading in Africa.

To clarify, stablecoins don’t mean you can skip daily risk management tasks; you still need to address counterparty liquidity, regulatory risk, and all of that.

Yes, there are still reputational risks and KYC and AML requirements you must meet. Stablecoin itself is not without risk. Tether, the world’s largest US stablecoin holder, was recently downgraded by S&P. Circle, the second-largest stablecoin by USD-denominated market capitalisation, is better aligned with US regulations and could be the first choice for risk-sensitive investors. However, it is not as liquid.

Is there a regulatory risk that a new US administration will close them down?

I don’t think so. If it isn’t USDT or USDC, it will be someone else. It’s not a process that will be stopped, especially after the GENIUS Act, enacted in July 2025, which created the first clear U.S. regulatory framework for payment stablecoins.

Now, let us move on to tokenisation. What is it, and how does it work?

A year ago, I discovered an interesting initiative by a fintech company in Mumbai. I contacted the CEO and realised the company had built one of the largest commodity tokenisation platforms in the world. It utilises blockchain technology and has tokenised over $800 million worth of farm commodities.

This company operates a warehouse receipt financing system in which farmers receive digital, tokenised warehouse receipts recorded on the blockchain that serve as secure collateral for loans. Farmers can trade, refinance, or sell their tokenised receipts through an integrated marketplace.

The platform currently operates in approximately 1,500 warehouses across five states. It has disbursed over $25 million in digital loans to more than 70,000 smallholder farmers. It is a remarkable initiative, recognised by the Bill & Melinda Gates Foundation as unique.

I went to India, saw what they had done, and said, “We have to do that in Africa.” The CEO and I travelled together to Kenya, where we will soon launch a similar initiative.

Why are tokens better than paper warehouse receipts?

Firstly, there is no risk of forgery.

Second, farmers can trade or cash in their tokens in parts. When you deliver 100 tonnes of cocoa to a warehouse, you receive 100 tokens. Tokenisation, combined with stablecoins and blockchain technology, allows cocoa in the warehouse to be sold to investors in separate lots. The large US banks are doing the same with the fractionalisation of Treasury bonds and bills, enabling smaller investors to take part in the market.

We will reach a point in Africa where individual farmers are financed for 25 kilos, 25 tonnes, or whatever, and individual investors provide funding for these farmers for $25 or $250.

It’s a revolution. The challenge we face today in private credit is that impact finance, which everyone discusses at ESG conferences, is hard to implement. The reporting required for it is overwhelming. We will see a new structure emerge in which trade finance becomes more accessible.

Isn’t it a sort of micro-financing?

I call it macro finance with digital tools.

You’ve heard of the tokenisation of real-world assets, or RWA. Today, you can tokenise existing goods, but what about tokenising a crop that hasn’t been planted yet? Then you can also tokenise a person’s behaviour.

This is already happening in India, where everyone has an online ID. It is straightforward to identify individuals and assign a credit or performance rating. For instance, you could identify a particular farmer who has performed exceptionally well over the past two or three seasons, add this achievement to their credit score, and tokenise it.

When I interviewed Saurabh Goyal, he told me that blockchain works with Bitcoins but not with physical commodities. Am I correct in thinking that tokenisation is the missing link, enabling commodities to be traded easily on a blockchain platform?

Yes, definitely, yes.

However, remember that this is a digital twin of a real-world asset, so whatever is traded must ultimately be returned to the physical commodity. That remains the weakest part of the process.

Let’s examine financing cocoa exports from West Africa. Instead of a conventional warehouse receipt overseen by a collateral manager, someone issues tokens, and I convince financiers or traders that they are as dependable as the actual goods. The goods must be physically present. There is a risk of a disconnect between the digital record and the real-world asset. This aspect must be carefully considered and properly managed.

In other words, you issue the token for the goods in the warehouse, but the goods disappear.

Exactly.

Will that be the most complex challenge in Africa?

Yes.

The second challenge will be acceptability. People in Africa are very traditional. However, everyone was surprised by the explosion in mobile phone use. We expected Africa to be ten years behind. You’ve heard of M-Pesa, the East African mobile payment system widely regarded as one of the most important developments of its time. I am confident that Africa will quickly embrace Blockchain and tokenisation.

The third challenge is obtaining regulatory approval for digital assets. Some countries now permit it, and it will become more widespread. I have no doubt about that.

The fourth is a notable client risk because you have many small and medium-sized traders.

What about the big operators? Are the ABCD++ group of companies moving into tokenisation and stablecoins, or are they resisting?

I don’t think that the leading traders are particularly interested. They have experimented with blockchain and set up Covantis, a joint initiative to rationalise and digitise documents on a shared platform. They employ a whole team of execution staff in their shared back office in Geneva to handle paper bills of lading and certificates of origin.

In attempting to digitise the industry, I believe they have chosen the wrong approach. They require a simpler, more adaptable solution. Stablecoin is one such option because it does not handle the entire transaction process; it merely facilitates payments. When it comes to payments, there are two risk factors: payment risk and market risk. You can use a stablecoin for both guarantees and payments.

However, I anticipate that large companies will be hesitant to adopt stablecoins and tokenisation initially, although they might do so indirectly through infrastructure or financing divisions rather than through front-office trading. It will be driven by the base, not the top. It will be a bottom-up, rather than a top-down, phenomenon.

What about Tether’s entry into trade finance? Is it a revolution? Will it transform the African commodity trade?

Tether has announced plans to deploy $1.5 billion in trade finance. I haven’t seen any evidence of this in practice. They’ve completed a few transactions, but they are already several months old.

Would it be a revolution? I’m unsure, but it would certainly represent a radical disruption for established private credit stakeholders. Currently, the largest credit fund in Africa deploys a few hundred million dollars, compared to Tether’s $1.5 billion.

The company has a greater interest in LATAM, a powerhouse in commodities. If you want to gain traction and grow quickly, that is where I would start. Africa should be next, given that traditional banking infrastructure is limited and transaction costs are high.

The strongest foundation for a trade finance empire is ownership of physical assets used to move goods. Think of DP World or Maersk. They can be more confident in trade finance because they control the goods. When you have control over the goods, you don’t require a collateral manager to reduce the risk. If, six months from now, you tell me that Tether has acquired ports or a global network of warehouses, it would make a lot of sense.

Okay, I hadn’t considered that, but it makes sense. It’s much safer to tokenise and digitalise if you control the physical commodity and own the infrastructure. Is that the key?

It is the key. There are two ways to use collateral: either you control it, or you own it. Control is only that good, you know? Shit can happen. Owning it gives you ultimate security.

It also gives you leverage. Imagine you own a 300,000-tonne port silo. Someone delivers 25,000 tonnes to the silo to supply a vessel arriving in two weeks, but the ship is delayed. Do you think the same 25,000 tonnes will remain in the silo until the ship arrives, or will it be delivered to another vessel? Someone else will use the 25,000 tonnes. Suddenly, you have the leverage for trading.

Anything to add?

I’ve attended a few recent crypto conferences, and many traditional Bitcoin holders might be interested in exploring alternative investment options. The same balance sheets that supported exchanges and DeFi are shifting toward the real economy and are now looking at opportunities in commodities, storage, and shipping. The boundary between digital finance and physical trade is rapidly vanishing.

We are on the verge of a revolution in commodity transactions and trading, along with a surge of funding from the crypto sphere. Traditional finance is reaching a breaking point, and the combined power of stablecoins and tokenisation is poised to fundamentally change how commodities are financed, traded, and settled worldwide.

Thank you, Remi, for your time and input.

© Commodity Conversations®2026

I have spent the past week working on my new book about sugar, delving deeper into the sugar-and-health rabbit hole. Back in 2015, I wrote.

What about the tooth decay – is that still a problem? When I was growing up in the 1960s, I disliked visiting the dentist; I always seemed to end up having a large hole drilled in one of my teeth and having it filled with lead.

When my children were growing up, they seemed to eat more sweets and candies than I ever did, yet all four of them reached adulthood without a single filling. They even looked forward to their visits to the dentist; they could read the latest comics in the waiting room. I attributed this intergenerational change to the fluoride in the tap water. 

Recent research suggests it may not have been the fluoride in the water, but rather that our kids rarely drank sugar-sweetened soft drinks (SSBs).

Other children are less fortunate. Recent NHS England data show that tooth decay is the leading cause of hospital admissions among 5- to 9-year-olds in England, surpassing other common childhood conditions, including acute tonsillitis. The data showed that 21,162 children aged 5 to 9 were admitted to hospital in 2024/2025 due to tooth decay.

Dr Charlotte Eckhardt, Dean of the Faculty of Dental Surgery (FDS) at the Royal College of Surgeons of England (RCS England), said:

“These figures are a public health emergency. Tooth decay is entirely preventable, yet thousands of children are hospitalised every year for procedures that could have been avoided with simple daily habits and better access to an NHS dentist.”

But is sugar to blame? In a 2018 study, the authors wrote:

Based on data from the 2011-2012 U.S. National Health and Nutrition Examination Survey (NHANES), there is a positive and statistically significant relationship between added sugar intake (grams/day) and dental caries (defined as the number of decayed, missing, or filled primary and permanent tooth surfaces as proportion of the total number of tooth surfaces in the mouth) for children ages 18 years and younger.

Research published in 2023 confirms a strong link between sugar consumption and dental caries among children. The study found that SSBs contributed significantly.

An earlier review of 6–12-year-olds found that higher intake of dietary free sugars, especially soft drinks, was linked to increased caries incidence in both deciduous and permanent teeth, including an incidence rate ratio of 1.75 when soft drink consumption moved from low to high over two years. The authors explicitly stated that sugar-sweetened beverages contribute to the development of caries.

However, we should not put all the blame on SSBs. A 2023 meta-study found that unhealthy processed foods also contribute to tooth decay. My own dentist told me that potato chips were now the number one tooth public enemy; they stick to your teeth while sugar doesn’t. Even so, drinking sugar-containing soft drinks, sugar-flavoured milk, and fruit juices between meals also keeps the pH level in your mouth high throughout the day, which favours tooth decay.

So, what to do? What should you do as a parent?

I was at least partially correct about the fluoride. In a review, the Oral Health Alliance (yes, that is a thing) writes.

Decades of research demonstrate how preventive oral health practices can help decrease the development of certain oral health conditions, including dental caries, or cavities. Preventive oral healthcare starts good oral hygiene practices, such as brushing with fluoridated toothpaste, drinking fluoridated water, flossing daily, chewing sugar free gum, and avoiding excess sugar and fermentable carbohydrates, and not smoking. Prevention also includes addressing socio-economic and racial/ethnic inequalities that impact access to oral healthcare and education.

Moving on, I wrote the following in 2015,

Although tooth decay is a recognised and genuine issue, child hyperactivity is not. Here, the medical profession owes an apology to all children raised during the 1980s and 1990s who had to endure sugar-rationed birthday parties. We now understand that sugar does not cause hyperactivity; being a child causes hyperactivity. Until a child is old enough to “hang out,” they will only have two speeds: “flat out” or “stop.” 

A 2019 meta-study confirmed that view, finding that sugar had no significant effect on children’s behaviour. I tried to explain that to my two daughters-in-law, but failed to convince them. It seems my grandchildren will continue to have low-sugar birthday parties. (It won’t do them any harm!)

© Commodity Conversations® 2026

 

It has now been ten years since I published my first book, The Sugar Casino, a brain dump after 37 years in the sugar industry. I am currently updating it, but I worry I might once again fall into the rabbit hole of sugar and health. While sugar and health are not my area of expertise, I cannot update the book without addressing the subject.

Fortunately, there has been excellent scientific research on the topic over the past decade, leading to greater clarity and less hype.

Ten years ago, when I wrote my book, I was concerned that the body might process sugar in liquid form—whether in a sugar-sweetened beverage (SSB) or fruit juice—differently from sugar in solid foods. Without scientific proof, I wrote:

When you eat an apple, it takes time for your stomach to break down the fibre in the apple to extract the fructose; when you drink a sugar-containing soft drink, that work has already been done for you. Some argue that the “rush” of fructose in a soft drink may overload your liver and encourage it to turn it into fat.

There is another issue with calorific soft drinks: some researchers have questioned whether the mind registers the calories in liquids.  For most of human existence, nearly all calories came from solid food. Only in recent history have humans obtained significant calories from liquids. Therefore, it would not be surprising if the human brain is not hardwired to recognise this new phenomenon of calorie-containing liquids. 

You can try a simple test at home. One 8-oz (250-ml) glass of apple juice contains approximately 175 calories from three to four apples. This evening, before dinner, drink a glass of apple juice and see if it reduces your appetite. You will find it won’t.

Tomorrow evening, eat three and a half apples before sitting down at the dinner table. Even though you have consumed the same number of calories as the previous evening, you will find that you are far less hungry. Your stomach will feel full, giving you a sensation of “satiety” that will result in you eating less for dinner.

Note that both HFCS and table sugar are similar; they contain approximately the same amounts of glucose and fructose. Glucose is absorbed directly into the bloodstream (activating the brain’s reward system), but fructose must first be processed by the liver. If the liver receives too much fructose at once, it converts some of it into fat. 

It appears I was at least partly right. In the largest and most comprehensive meta-analysis of its kind (1), researchers from Brigham Young University, collaborating with researchers from German institutions, found that the type and source of sugar may be more significant than previously believed. They state:

Researchers analysed data from over half a million people across multiple continents, revealing a surprising twist: sugar consumed through beverages—like soda and even fruit juice—was consistently linked to a higher risk of developing type 2 diabetes. Meanwhile, other sugar sources showed no such link and, in some cases, were even associated with a lower risk.

Another study (2), also published this year, raised similar concerns. The authors wrote:

Because of their liquid form, Sugar-Sweetened Beverages (SSBs) are rapidly consumed and digested, resulting in lower satiety, higher caloric intake, and weight gain. 

High doses of rapidly digested fructose directly activate hepatic fat synthesis, leading to ectopic fat deposition and metabolic dysfunction in liver and muscle. SSBs may also replace other healthier foods in the diet, contributing to harm through their absence.

In 2023, the British Medical Journal published an umbrella review (3) of dietary sugar consumption and health, highlighting the role that SSBs play:

Generally, sugar-sweetened beverages are the largest source of added sugars, including carbonated and non-carbonated soft drinks, fruit drinks, and sports and energy drinks. Previous surveys have shown that consumption of sugar-sweetened beverages is declining in many developed countries, although consumption levels remain high. However, the consumption of sugar-sweetened beverages is still increasing in many developing countries, which may be attributed to their increased availability, accompanied by economic development.

The message is resonating, particularly among younger generations. In a narrative review of the impact of free sugar on human health (4), the authors state:

The turn of the century witnessed a modest decline in added sugar intake. A report by the US Department of Agriculture noted a 14% reduction in added sugars and sweeteners between 1999 and 2014 [76]. Trends from the US 2001 to 2018 National Health and Nutrition Examination Survey (NHANES) highlighted this reduction, albeit observed only in younger adults (aged 19–50 years) from a mean of 96.6 g to 72.3 g per day, including a reduction in SSBs from 49.7% of daily sugar intake to 37.7% [79].

A similar reduction in sugar was observed in Australia and New Zealand between 1995 and 2011, with the proportion of dietary energy from free sugars declining from 12.5% to 10.9%. The greatest contributor to this decline was again observed in children and young adults.

As a bit of fun, I included a sugar-trader’s diet in my 2105 book (5), writing:

A friend of my wife recently completed a “juice week” during which she consumed only vegetable and fruit juice for seven days. She did it to detox her body and lose weight. My wife asked her whether she had lost weight, and she replied that she hadn’t, but she did feel better and enjoyed the challenge of not consuming anything that hadn’t been blended. 

There are two issues with this. The first is that blending fruit may lead to consuming more fruit without feeling full. The second is that the liver might struggle to process all the fructose received at once, potentially converting some of it into fat. 

If you eat the fruit whole rather than blending it first, you will not only eat less of it but also allow the fructose to be absorbed more slowly into the body, giving your liver more time to process it. (You should notice the use of the word “may”; this remains a controversial topic.) Therefore, liquifying fruit into smoothies or juice means you will consume more calories and less fibre. Instead of juicing the fruit, eat it whole.

However, I also added:

My grandmother used to say, “A little bit of what you fancy does you good; that is my first rule of healthy eating.” 

Or, as Oscar Wilde once famously said, “Moderation in all things, including moderation.”

References

1 Brigham Young University, 2025: Differential risk from sugar in drinks vs solid food.

2 Lara-Castor et al., Nature Medicine, 2025: Burden of disease analysis related to SSBs.

3 BMJ Umbrella Review, 2023: Sugar’s association with 45 adverse health outcomes.

4 Gillespie KM et al., 2023: Narrative review of free sugar impact.

5 Yeah, you’re right. I won’t include a sugar trader’s diet in my new book.

(C) Commodity Conversations 2025

In a previous blog post, Pedro Nonay discussed how regional champions are taking market share from traditional grain trading companies.

One of my readers kindly shared a link to a case study by Marcos Fava Neves, Dean of Harven Agribusiness University in Ribeiro Preto. It concerns AMAGGI, a notable regional player in Brazil.

I am embarrassed to admit that I only included a brief paragraph about AMAGGI in my 2019 book, Out of the Shadows – The New Merchants of Grain.

I try in my books and blogs to present a positive picture of our sector and the companies that operate within it, but without falling into what I call “Public Relations Fluff.” It is a difficult balance to strike.

Some reviewers have criticised my books for depicting an overly optimistic view of the sector. Nevertheless, I make no apologies. There are more than enough books that present a critically negative portrayal of the agricultural commodity trade. I hope my books help balance out some of those negative accounts.

Having given that disclaimer, this is what I would write about AMAGGI if I were to update my book now.

And, I must admit, the company is a prime example of a regional champion.

A Brief History

AMAGGI traces its origins to 1977, when André Maggi established Sementes Maggi in Paraná, Brazil, initially concentrating on seed production. The company’s expansion into Mato Grosso marked a strategic shift towards large-scale soybean farming. This move reflected the Cerrado’s growing potential and set the stage for Brazil’s rural transformation.

By acquiring substantial farmland and investing in storage and logistics, AMAGGI facilitated significant productivity improvements and played a key role in the development of towns such as Sapezal. AMAGGI subsequently diversified into energy, logistics, and international trading, establishing offices in China, Paraguay, and Europe over the following decades.

Following André Maggi’s death in 2001, his son, Blairo Maggi, assumed leadership of the company. He also gained national recognition as a governor of Mato Grosso and Brazil’s Minister of Agriculture.

AMAGGI’s growth mirrors the wider Brazilian agribusiness trend towards vertical integration, asset-heavy logistics, and internationalisation.

Market Share and Competition

Today, AMAGGI ranks among the world’s largest private soybean producers, managing over 360,000 hectares of farmland and trading nearly 20 million tonnes of grains and fibres annually, primarily soy, corn, and cotton. It cultivates more than 1.5 million tonnes of soybeans each year on its own farms.

Annual sales consistently surpass US$9 billion, positioning AMAGGI among the world’s top-tier players. AMAGGI’s market share in Brazilian soybean exports is smaller than that of global multinationals but remains significant among domestically owned companies. In recent years, AMAGGI has exported approximately 9% of Brazilian soy, a figure comparable to Louis Dreyfus but lower than Cargill’s 16%, Bunge’s 12%, and ADM’s 11%.

AMAGGI’s main competitors all operate soy processing plants and extensive regional supply chains in Brazil. These multinationals compete both in sourcing and logistics across the country, particularly in Mato Grosso, the nation’s top grain-producing state.

Domestically, competitors such as Raízen (bioenergy), Lavoro (input distribution), and Comerc Energia (energy solutions) challenge AMAGGI’s diversified business model. However, AMAGGI remains unique for its deeply integrated approach, combining agribusiness, logistics, and energy under a single corporate structure.

AMAGGI’s share of global soy and grain flows is significant and increasing, generally estimated at 4–5% of the world’s soy trade and a similar proportion for total grains based on traded volume.

AMAGGI’s vertical integration, emphasis on Brazilian origination, and rapid volume expansion have enhanced its global significance. Still, the worldwide soy and grain sector remains highly fragmented, with no single company holding double-digit market share.

Strategic Direction and Future Plans

AMAGGI’s recent strategic initiatives emphasise a dual focus on sustainability and vertical integration. The company has invested heavily in logistics to enhance grain export capacity, expanded energy generation (notably hydro and biodiesel), and actively pursued digitisation and environmental management platforms, such as ORIGINAR, a technology platform launched by Amaggi to monitor its grain supply chain.

Sustainability partnerships, such as those with reNature, underscore AMAGGI’s commitment to leading in regenerative agriculture and climate-aligned supply chains.

Looking ahead, AMAGGI anticipates further international expansion, harnessing technology for supply chain management, and exploiting Brazil’s growing reputation in sustainable commodity exports. While competition in global agri-trade may increase, the company’s integrated model, substantial asset base, and focus on sustainability should keep it at the forefront of the Latin American agribusiness story.

PS. Please let me know if you feel that I should highlight other regional champions.

PPS, Zero Carbon Analytics recently published a report on soy production in the Cerrado and how land clearance is reducing rainfall and adversely affecting yields. It’s worth reading.

© Commodity Conversations® 2025

As Pedro Nonay explained on a panel during the recent Commodities Show in Geneva, there has been a quiet revolution in grain trading over the past decade: the world of neat, global flows dominated by a few multinationals is giving way to a more fragmented landscape where regional champions and state-backed firms control an increasing share of the trade.

From ABCD To ABCCD++

For most of the modern era, global grain flows were dominated by a small number of international firms that combined origination, logistics, risk management, and relationships under a single global umbrella. That model has not vanished, but it has been weakened by specialised regional players who understand their local basins better than anyone else.

This shift is not accidental; it reflects politics, sanctions, food security concerns, and a broader rewiring of globalisation into a more bipolar transactional system. Grain trading, as it often does, is simply expressing in physical flows what is already true in geopolitics.​

Wheat As The Front Line

Wheat is where this fragmentation is most visible. Russia now accounts for close to 30 per cent of world wheat exports, yet international players are largely excluded from that flow, with state-linked or domestic houses acting as the key conduits.

The result is a two-tier market: on one side, global traders who still dominate in many origins and destinations; on the other, a growing cadre of regional champions that manage specific corridors and price relationships. The more politics intrude, the more those regional specialists gain relative power vs the old global model.​

Three Tiers Of Players

The emerging business structure can be organised into three tiers: global, state, and regional. The large multinationals are consolidating, becoming fewer and bigger, seeking scale in capital, risk, data and logistics to defend their global relevance.​

Alongside them sit state players, whose mandates blend economics, politics, and food security: Demetra/Solaris in Russia, COFCO in China, Olam in its Gulf-linked incarnation, and sovereign-backed stakes in traditional houses such as ADQ’s investment in Louis Dreyfus.

Then there are companies with a strong local presence that have been expanding their CIF trading, including Cefetra in Europe, Invictus and AlGhurair in the Middle East and Africa, and Enerfo in Asia.

We should also mention that there are long-established local companies with crushing operations at origins such as Argentina and Brazil, and destinations such as China or Algeria.

Then there is the third bloc: regional champions that connect local producers and consumers to this more polarised global system, often with sharper local knowledge and greater political agility.

Why Regional Champions Are Winning Share

Several forces are steering volume towards regional specialists. First, the world is transitioning from an era of multilateralism and rules-based trade to what Pedro terms a “bi-decade” that is bipolar, biglobal, bilateral, and binary, where being aligned—or at least acceptable—to a specific camp is as important as price.

Secondly, the grain trade is becoming more ‘weaponised”, with export embargoes, sanctions, and government-to-government deals changing who can ship to whom and under what conditions. In this environment, agile, locally trusted operators often hold an advantage over global corporations that are more constrained by regulation, reputation, and financing arrangements.

Logistics Revolution And The Local Edge

At the same time, logistics are undergoing their own revolution, propelled by climate-related changes such as a potentially more navigable Arctic, as well as shifting investments in ports, railways, and storage facilities along new trade routes. Regional leaders are often best placed near these assets to capitalise on emerging bottlenecks or arbitrage opportunities as routes evolve.

Their competitive advantage is rarely just freight; it is culture, relationships, and the ability to operate with respect for local norms rather than with an imperial mindset. In a world where money no longer buys everything, value systems and mutual trust can be as decisive as balance sheet strength.

Competition, Ethics And Behaviour

Fragmentation has not only altered who trades but also how they behave. The more the system divides into blocs and corridors, the more inconsistent standards become regarding transparency, ESG, and even fundamental business ethics.

This creates a competitive environment where some actors must adhere to strict public-market and Western compliance standards. In contrast, others operate under more flexible or alternative rules, supported by state interests or oligarchic capital. For regional champions, the challenge and opportunity lie in manoeuvring between these worlds without compromising long-term credibility.

From Free Trade To G2G

The core question here is whether the grain trade is returning to a government-dominated model similar to the 1970s. The comparison is fitting, but the outcomes differ: today’s world is highly interconnected, data-driven, and technologically mediated, so state power now appears more through partnerships, stakes, regulations, and informal pressure rather than solely via centralised state boards.

The debate is increasingly focused on “free trade versus government-to-government trade,” and regional champions often sit in the middle, acting as executors or partners in deals where states set the framework and private companies handle the risk and logistics.

How The Majors Need To Adapt

For global companies, competing in this environment requires more humility and collaboration. The era of imposing universal templates on every region has ended; respect and regionalisation now become strategic necessities rather than mere marketing catchphrases.

Future winners among the majors will probably be those who can work together with state entities and regional champions, align values where possible, and accept that control is less important than access. In a fragmented world, connectivity—being the trusted link between very different systems—may be the ultimate defence.

Hedge Funds and Energy Companies Eye Physical Trading

Alongside regional and national players, hedge funds using advanced analytics are broadening their focus from proprietary agricultural trading to physical markets, as demonstrated by Hartree’s acquisition of ED&F Man and Viterra’s cotton team. Energy trading giants like Vitol are also exploring physical trading but often remain focused on proprietary activities. The merging of data, digital tools, and real-time analytics is speeding up these developments, giving new entrants an advantage. These firms are actively recruiting talent from traditional agricultural traders and will continue to do so.

What It Means For The Next Generation

For young people entering grain trading, the rise of regional champions and state players may appear to create a more crowded landscape, but it also provides many more entry points. Careers are no longer confined to a few global desks; they can begin in specialised regional firms, logistics companies, state-linked businesses, or even data and AI providers integrated into this ecosystem.

The common denominator remains the same: curiosity, analytical rigour, common sense, and the ability to raise the periscope and view markets from multiple angles rather than from a single silo. In a world of asymmetry—in demography, competitiveness, energy, and power—those who understand how regional realities connect to global flows will be the true champions of the next grain-trading era.

PS, I interviewed Pedro this time last year for my book Commodity Conversations – An Introduction to Trading Agricultural Commodities. You can read an extract of the interview here.

© Commodity Conversations ® 2025

A master’s student recently asked me for advice. She had applied for a trading position at a major oil-trading firm but had been turned down.

She was sharp, articulate, and clearly passionate about markets. If I still ran my company, I would have hired her immediately. So why didn’t they?

My guess — and it was only a guess — was that the interviewer didn’t think she was “tough” enough.

Oil trading has that reputation. Sometimes you negotiate contracts in places where business norms, political environments, and expectations are very different. The work can feel intense, unpredictable, and occasionally confrontational.

But “toughness” in trading looks very different from the cliché.

Because the truth is: markets will knock down everyone.

Even when your analysis is solid, you can lose money. You can be right and still be forced out of a position. The key isn’t bravado; it’s the ability to reset, learn, and get back into the ring. A kind of emotional agility.

Rocky Balboa with spreadsheets.

As the student told me about some of the challenges she’d overcome in her life, it was apparent she had exactly the resilience the job required. Gender has nothing to do with it. Resilience is universal.

After our conversation, I found myself reflecting on my own assumptions.

Interviewers make life-changing decisions based on ten-minute conversations — and our brains love shortcuts.

But here’s what I’ve learned after decades in markets:

1. You can be both tough and kind.

Some of the best traders I know are empathetic, generous mentors. They’re steady under pressure, not loud.

2. Physical trading isn’t about confrontation.

The best trades are built on collaboration, transparency, and long-term relationships — not “winning” at someone else’s expense.

When I traded derivatives, I never tried to “beat” the market. I treated it like a conversation partner. When I moved into physical trading, I realised some people thrive in high-pressure negotiations — and some don’t. I eventually found my place as a broker, where analysis and relationships mattered more than brinkmanship.

And let’s be honest: trading isn’t the only job that demands toughness. Teachers, doctors, founders, artists, engineers — everyone gets knocked down. Everyone has to get up again.

So yes, you need resilience to trade. But resilience isn’t aggression. It isn’t volume. It isn’t swagger.

At the recent Commodities Show in Geneva, I asked a friend — one of the best traders I know — whether toughness is essential. He paused for a long time.

Then he smiled and said, “You need to be as hard as nails.”

Maybe. Or maybe there’s more than one way to be tough.

What do you think?

© Commodity Conversations® 2025

I recently published a blog about trends and threats in the commodity business. Climate change is one of the threats. This week, I reached out to Steve Wateridge to ask how it is affecting the two crops he follows—cocoa and coffee. I asked first about cocoa.

Climate change is often blamed for everything. There’s a lobby dedicated to amplifying the threat of climate change and pointing to any weather anomaly as evidence of it. You hear about it all the time. It is sometimes justified, but not always.

Cocoa and coffee prices have hit record highs in the last 18 months. I will discuss coffee later, but the record-high cocoa prices were caused less by climate change and more by a severe El Niño, along with long-term structural issues such as ageing trees and swollen shoot disease.

The disease is caused by the Cacao Swollen Shoot Virus (CSSV), which is transmitted from infected to healthy cacao trees by different mealybug species. It is one of the most economically damaging viruses affecting cacao production, as CSSV reduces yields over time and will eventually cause trees to die. The disease has had a significant impact on cacao production in Ghana and Côte d’Ivoire in recent years.

The disease spreads slowly, but as yields decline, the farmer gives up and replants. The problem is, if they replant without realising they’ve got the virus, the new trees will become infected as well. This has been ongoing for 20 years. I first became aware of CSSV in Côte d’Ivoire in 2008, and it has since worsened, yet the government has not taken action to control its spread. The disease is the leading cause of recent poor crop yields in Côte d’Ivoire and Ghana.

Cocoa prices have remained too low for too long. Governments have not taken the disease seriously, possibly because it is mainly smallholders who produce cocoa. There are no big plantations. The Ivorians may not have been aware of the way the disease was spreading, but the Ghanaians have known about it. It was a significant factor in their crop’s collapse in the 1970s, but the government lacks the funds to address it.

It’s truly coming home to roost. The worrying thing is that nothing significant is being done to change it. Cocoa production in Côte d’Ivoire and Ghana will continue to decline until this issue is addressed.

But isn’t climate change at least partly responsible?

Climate change has not been a significant issue. I don’t see any convincing evidence that the climate in West Africa has changed enough to cause a substantial decline in crop yields. We are observing record crops in Cameroon, Nigeria, DR Congo, and Uganda. In South America, record crops are also being harvested in Ecuador and Peru.

Why has the CSSV issue not been addressed previously? And with these record-high cocoa prices, will producers and governments now have the funds to tackle it?

Why has it not been addressed before? You would need to ask the governments of Côte d’Ivoire and Ghana. Either they were unaware of it, or they ignored it.

Once a tree becomes infected, it must be cut down, the infected tissue burned, left for 12 months, and then replanted. There has been no such programme in place. From 2010 to 2020, cocoa production in Côte d’Ivoire expanded significantly, and to a lesser extent in Ghana’s western region, driven by increased area, deforestation, and new plantings. This increase offset the adverse effects of swollen shoot disease.

Côte d’Ivoire production nearly doubled during that period, even as the disease was spreading. Yields began to decline once these new trees reached maturity, and the disease became even more evident, accelerating that decline.

Despite the prices we’ve seen over the last 18 months, there are no real efforts to tackle the issue in Côte d’Ivoire and Ghana. This means prices will need to remain higher for longer to encourage production elsewhere and reduce demand.

The question becomes, “What price level achieves that?

Over the last 12 months, we found that a cocoa price of $10,000 per tonne is too high. It destroys too much demand and incentivises too much supply outside Côte d’Ivoire and Ghana.

It doesn’t mean we have to revert to $2,000 or $3,000 per tonne. That would be too low. A price around $5,000 or $6,000 per tonne should establish a balance between supply and demand, with short-term stock replenishment.

You mentioned that other West African producers are experiencing record crops. What are they doing differently that Côte d’Ivoire and Ghana are not doing right?

They pass higher prices on to the farmers. Côte d’Ivoire and Ghana have state marketing boards that sell forward. Since they sold at lower prices, they haven’t been able to give farmers the higher market prices. Now, farmers in both countries are receiving $5,000 per tonne.

When the price was at $12,000 per tonne, farmers in Cameroon and Nigeria received $10,000 per tonne. They have responded with better farm care, disease-spraying, improved husbandry, and new plantings. The new trees won’t produce fruit for another couple of years, but all of this helps.

The state marketing boards impose a tax on farmers in Côte d’Ivoire and Ghana. They pass on 60-70% of the world price, while in Ecuador, Cameroon, and Nigeria, farmers receive 80-90% of the world price. Unfortunately, the proceeds from that taxation haven’t been invested in the cocoa sector. Instead, they have been used for other purposes.

How has consumption been impacted?

When prices ranged between $2,000 and $3,000 per tonne, we became accustomed to cocoa consumption increasing by 2 to 3 per cent per year.

However, if your two leading producing countries are in decline, you need significantly higher prices to boost cocoa output elsewhere and to slow demand growth. We’ve seen unprecedented demand destruction in cocoa. We’ve lost 10 per cent over the past two years due to high prices.

It’s not just about passing higher prices to consumers, leading them to eat less chocolate. You’re seeing manufacturers reduce cocoa content in their products. The classic example was just this week, when McVitie’s in the UK replaced cocoa butter in its Penguins and Club biscuits with cheaper vegetable fat. They can no longer say,  If you like a lot of chocolate in your biscuit, join our Club, because it’s not real chocolate; it’s chocolate-flavour.

You mentioned that vegetable oils are replacing cocoa butter. Does this alter the taste of the finished biscuit?

When I entered the cocoa industry in the 1980s, I worked at Rowntree’s. Cocoa butter is a delicate vegetable fat in terms of its cooling curve —the temperature at which it melts and so on. It wasn’t easy to replicate. At that time, there were alternatives, but they often felt waxy. You could tell the difference between real chocolate with cocoa butter and cocoa liquor, and the chocolate coatings, which contained cocoa liquor or powder and vegetable fat.

The technology has improved so much that it’s difficult to tell the difference. I’ve tried the new recipe for Penguin biscuits. I didn’t know that it was only chocolate flavouring. They’ve replaced cocoa butter with a great substitute. I couldn’t tell the difference.

It makes it easier for these substitutions to occur. There’s reputational risk. They have had to change the slogan for Club biscuits, and it has attracted significant media attention, even though consumers can’t tell the difference.

Well, that’s all I’ve got on cocoa. Do you have enough energy left to talk about coffee and climate change?

Absolutely! Climate change is significantly impacting coffee production.

Over the past 40 years, the coffee market has generally operated with oversupply at or near production costs, punctuated by price spikes during adverse weather conditions. Brazil is the world’s largest coffee producer, but it is susceptible to periodic droughts and frosts that affect production. These events cause price increases, which tend to limit demand growth and encourage increased production elsewhere. When the weather returns to normal, Brazil produces a large crop, leading to another period of oversupply, which drives prices back to the cost of production. Typically, this cycle takes about 18 months to two years to complete.

The main change is that the current issues in coffee, which have led to record-high prices recently, basically began about five years ago. It was during 2021-22 when a major weather-related deficit occurred, caused by drought and frost in Brazil. Since then, the Brazilian crop has continued to underperform consistently.

I firmly believe that climate change is responsible. We have the evidence. Look at the last five years in Espirito Santo and Minas Gerais. The weather has been drier, on average, than it was over the previous ten years, and those ten years were drier than the ten years before them. It’s also been hotter, on average, than the last ten years, which were hotter than the ten years before that.

Climatologists attribute it directly to deforestation—not only in the Amazon but also in the Atlantic forest. Whatever the cause, the conditions in Espirito Santo and Minas Gerais are now less than ideal for coffee growing. It doesn’t mean you can’t grow coffee, but it does mean the crops consistently underperform their potential.

That’s why we need prices to remain high to curb demand growth. We’re not observing anything like the demand destruction we see in cocoa.

Coffee demand tends to be more resilient. It is uncommon for global coffee demand to decline, even with record-high prices. What we see is a stabilisation in demand growth. The long-term trend indicates that coffee consumption grows at about 1.5% annually. If it doesn’t grow for seven years, that leads to a 10.5% decrease in demand. Prices have been very good for farmers, and we are continually increasing production capacity through better farm management and expanding cultivation areas. What we are not observing is that capacity being fulfilled. It is certainly not in Brazil.

We’ve also experienced a severe El Niño that has impacted coffee production in Asia. Severe El Niños are often linked with drought in Indonesia and Vietnam, resulting in poor crop yields. Additionally, there have been disease issues in Central America and Colombia.

What we need to bring prices down is for Brazil to reach its full potential. If that happens, there will be a significant surplus, and prices will drop to the level of production costs.

What about Vietnam? Has climate change affected coffee production there, too?

I don’t see much evidence of that. The problems in Vietnam over the past few years have been mainly due to a severe El Niño, which brought the rainy season to an early end and delayed its start in April and May. This increases pressure on irrigation. The robusta crop depends on irrigation.

Guy Hogge once told me that coffee production in Central America was moving to higher altitudes and had already increased by about 500 metres because of climate change. Is that true?

I don’t know as much about Central America as Brazil, Vietnam, and Colombia, as these are the leading coffee producers. However, Central America’s production hasn’t increased in the last five or ten years. They’ve had disease issues and labour shortages caused by migration to the US. I wouldn’t like to say if climate is also a problem there.

However, climate change in Brazil is a significant factor. It’s a real game-changer. I’m no longer sure what a typical weather pattern for crops in Brazil is, since we don’t seem to experience normal weather year after year.

Is the coffee sector taking climate change seriously?

That’s a tough question. Brazilian farmers are aware of it, but are they taking it seriously? There was a severe drought in Espirito Santo in 2016-2017, and the farmers invested heavily in irrigation and water storage. Previously, many farms irrigated from rivers, but the state government ended that practice, affecting crops. So now, many more farms have their own storage capacity.

I’m unsure whether that’s enough to lessen the impacts of climate change. It is helping, but the crops still underperform. However, prices will eventually fix the issue. They always do.

Slightly off topic, how is the US’s 50% tariff on Brazilian coffee imports impacting the market?

The coffee market experienced significant deficits in 2021/22 and 2022/23, leading to a drawdown of stocks.

Although the market was no longer in deficit in 2023/24 or 2024/25, we didn’t generate a surplus or rebuild stocks. We still face a tight stock situation. However, stocks should be replenished if we achieve a decent surplus in 2025/26 and 2026/27.

The 50% tariff has come amid a very tight stock situation in consumer countries. As a result, US roasters have tried to secure as much coffee as possible from outside Brazil, because Brazil is just too expensive. You know, usually the most significant flow of coffee in the world in July, August, and September is from Brazil to the US. It hasn’t necessarily stopped, but it’s undoubtedly been curtailed.

They are even shipping certified stocks from Europe to the US. The tariffs don’t affect global supply because the Brazilian crop remains available. But because Brazilian farmers have recently made substantial profits due to high prices, they are not panicking into selling their coffee cheaply or flooding markets outside the US. They believe this will be a temporary problem and are holding onto their coffee.

So, with the Brazilians holding on to their coffee, the US is attracting everything from outside Brazil, and the supply situation is only tightening.

What could cocoa learn from coffee regarding climate change and its associated risks? Should cocoa be worried about climate change?

There is no conclusive evidence that the climate is changing significantly in cocoa-producing regions.

If it becomes an issue, it will only worsen problems caused by the disease and the ageing tree stock. Prices will increase to a level that encourages farmers to invest more in cocoa, while discouraging people from consuming so much. That’s how markets operate.

Thank you, Steve, for your time and input.

© Commodity Conversations® 2025

William W. Wilson is a University Distinguished Professor and CHS Endowed Chair in Risk and Trading   at North Dakota State University in the Department of  Agribusiness and Applied Economics. His focus is risk and strategy as applied to agriculture and agribusiness, with a particular focus on procurement, transportation, logistics, international marketing, and competition. He teaches classes in commodity trading, risk, and agribusiness strategy. Bill recently published a paper, ‘Dynamic Changes in the Structure and Concentration of the International Grain and Oilseed Trading Industry.[1]

Good morning, Bill, and welcome to Commodity Conversations. My first question: What’s your assessment as to the level of concentration among commodity trading companies? Is the business environment competitive?

Our results suggest that the industry is highly competitive. In fact, in academic terms, we’d define the sector as competitively fierce.

Generally, the market share of the four largest firms (CR4) is around 30per cent, though this varies by commodity and country. The aggregate figures for FOB and CNF shipments are 32 per cent and 27 per cent, respectively. The statistics for C&F shipments averaged 33 per cent during the first three years of our study, but fell to 27 per cent in 2023. In all cases except for US exports, FOB shipments are less concentrated than CNF shipments.

The four firms with the largest market share for FOB shipments are Cargill, COFCO, ADM, and LDC, while the leaders for CNF shipments are COFCO, Bunge, ADM, and Cargill. There is a distinction in market leaders between FOB and CNF shipments.

In your paper, you refer to cluster analysis. What is it?

Cluster analysis is a statistical tool we use in big data analytics. We use it to identify which firms are most closely associated with each other. In our case, we attempted to cluster the trading firms based on the number of shipments they make, the number of origins and destinations they serve, and the commodities they trade. We identified three clusters.

The first consists of seven firms. In addition to the ABCD group, it includes COFCO, Viterra, and CHS (ABCCCDV). These firms account for 45per cent of global FOB shipments, which is significantly lower than the percentages reported in earlier studies. These results are fundamental to understanding the structure of the international grain trading industry. Rather than suggesting one segment called ABCD, there is a cluster comprising seven firms with similar characteristics.

Our second cluster is a large group of smaller firms with similar structural characteristics but typically have few origins or destinations. We refer to these firms as ‘the competitive fringe’.

Our third cluster comprises many small firms that handle commodities other than wheat, corn, or soybeans.

Your analysis reveals that seven firms, comprising the ABCD+ group of seven trading companies (ABCD + COFCO, Viterra, and CHS), account for 45 per cent of global FOBS shipments. In 2024, EY and others prepared a discussion paper for the EU’s Agriculture Committee that concluded the four ABCD companies “handle around 50–60 per cent of the worldwide trade in essential COPSs (Cereals, Oilseeds, Protein crops and Sugar), and 70–80 per cent if you include CIL (COFCO International) and Viterra.” Why do your figures differ from theirs? 

EY published their study when we were finishing ours.

The first thing to say is that the ABCD companies are not the four largest firms in the sector. COFCO is one of the largest. EY focused specifically on ABCD.

There are a few other distinctions. One is that they used all cereals, oils, proteins, and sugar. We omitted sugar and several of the others, including barley, sorghum, durum, other softs, including cotton pulses, cocoa, tapioca.

The second is that they use the expression ‘relevant information’ to describe their data sources, but don’t define it. They do say they look at how much grain was handled by each firm, but don’t define ‘handled’. ‘Handled’ does not necessarily mean ‘exported’.

In our data, we utilise what we call Seaborn Commodity Shipments, which track shipments from specific origins to specific destinations. We separate FOB from C&F.

I point that out because it’s likely that there’s a large amount of non-seaborn shipments of grain that result in exports. For example, there’s a significant movement between Canada, the US, and Mexico, as well as Ukraine to Poland and Romania, as well as intra-EU trade, which is all conducted by train or barge.

For example, ADM may originate 100 metric tons of soybeans from a farmer, process 50 metric tons, and sell 50 metric tons in the export market. They then rail the soybean meal into the domestic market. Taken together, it would mean they handled 240 metric tons, when the original volume was 100 metric tons. I suspect there’s some double counting in EY’s data when they use the word ‘handled’.

In my book, The New Merchants of Grain, published in 2019, I wrote that the top seven companies accounted for ‘about 50 per cent’ of the world trade in grains and oilseeds. Is the sector becoming more competitive?

Yes, it is – and significantly so.

I have traced every published study on this topic from the 1970s, starting with one by Richard Caves from Harvard in 1974, which suggested concentration ratios of 80 to 90 per cent. Over the years, it moderated back to 70 to 50 per cent.

In our study, we covered the period from 2020 to 2023. In the first year, the concentration ratio was 33per cent. By the last year, it had fallen to 27 per cent.

In an interview for my recent book, Commodity Conversations, Ivo Sarjanovic estimated the combined market capitalisation of the top eight ABCD+ agricommodity companies to be around $150 billion. To put that into perspective, Chevron has a market cap of roughly $250 billion, Nestlé around $230 billion, and PepsiCo approximately $200 billion. In my book, The New Merchants of Grain, I described the seven biggest agricultural traders as ‘Seven Dwarfs.’ Why do they come in for so much media attention and public criticism even though they are relatively small?

Grain trading companies suffer a disproportionate share of negativity compared to other major commodity companies. I hadn’t thought about it before, but I suppose it’s because it involves food and agriculture. Every country must deal with food and agriculture in some way or another. It’s an important topic that covers food price inflation, shortages, and food security, and most countries intervene in some way, more so than in other sectors.

Agricultural commodity trading companies must operate within these government guardrails while maintaining their social licence to operate.

Will the competitive fringe of companies continue to take market share from the ABCD+ group?

Yes. In general, there’s a tendency for all industries to evolve towards a few large firms and a large competitive fringe. Our study found that the competitive fringe is big in agricommodity trading. We identified 38 firms in the competitive fringe. They are niche players that have emerged in various ways, focusing on specific commodities, origins, or destinations.

They are not part of the ABCD+ group, but they are viable and significant companies that compete in the ABCD world.

Soren Schroder, a former CEO of Bunge, once told me that ‘There are too many companies trying to do the same thing with a small margin.’ Do you agree?

It is a challenge. This is an industry with substantial economies of scale, easy entry, and subject to volatile demand; consequently, there are many firms. The answer to your question is, yes, we probably have too many operating on small margins, but given the importance of volatility, which affects margins, that’s just a fact of life.

I wrote a separate paper, focusing on Egypt, where I attempted to document all the countries in the world that use an auction-type mechanism – tenders- to select suppliers. Before Russia invaded Ukraine, Egypt had more than 20 firms offering tonnage every time they had a tender. Now, that’s highly competitive, but it’s the reality of a commodity-type business.

How will Bunge’s acquisition of Viterra affect competition, and how was it received among US, Canadian and Australian farmers?

There was minor criticism, if any, of the proposed merger. I don’t recall any in the US. There was a bit of controversy in Europe, which was ultimately settled. Ditto for Canada and China. All relevant countries have now approved the merger.

I recently reran our data to examine that question. Before the merger, the CR4 – the four-firm concentration ratio – was 27 per cent with the top firms in the C&F market being COFCO, Bunge, ADM, Cargill, Viterra, and Dreyfus, in that order. Post-merger, the CR4 goes to 33 per cent, which, by definition, is more concentrated. The top firms now are Bunge, COFCO, ADM, and Cargill. If two firms merge, you can expect a higher four-firm concentration ratio, but it’s still not excessive.

This calculation presumes that buyers will not change their behaviour. However, some buyers will diversify to the competitive fringe and conduct less business than they did with Bunge and Viterra separately. It’s a natural transition in many industries that observe a merger.

Security has replaced sustainability as the buzzword in the agricultural trade and prompted state actors, such as COFCO, to enter the sector. SALIC (Saudi Agricultural and Livestock Investment Company) has bought Olam Agri, and ADQ (Abu Dhabi Development Holding Company) has an indirect 45 per cent stake in LDC. Will these investments make the countries more food secure?

There’s no doubt that food security is essential nowadays, and rightly so. As to your question whether these amalgamations between private and public entities result in greater food security, it all depends on how they organise and structure their business.

Having a venture between two entities will result in the importing country having more information, which will likely make them more assertive in trading and more strategic in their operations. That’s a good thing, but it doesn’t necessarily solve the food security problem.

Food insecurity has various causes, including climate change, weather-induced production shortfalls, and logistical bottlenecks. Having a public-private partnership doesn’t solve these issues.

My response to this, and the advice I offer to importers and major processors I consult with, is stock holding. You may not like it, because everyone grew up with a JIT (just-in-time) attitude, which is to not carry stocks. However, stocks play an essential role and are the cleanest way to mitigate the risks related to food security.

The quantitative analysis I have conducted suggests that an importer should likely maintain around 20per cent of their expected annual demand in stock. In the US domestic market, participants should hold stocks of approximately 15per cent. Both of those numbers are higher than conventionally taught.

My point is that these private-public relationships can mitigate the risk of food insecurity, but only if they adopt a more overt strategy of stockholding.

What about owning farmland? I recall that the Chinese were purchasing farmland and other agricultural assets in exporting countries, but it didn’t make them more food secure. You can still have localised poor weather or export bans.

Or wars. Owning a farm in Ukraine doesn’t mean that you can export your crops – and that’s if you can even harvest them. Owning assets doesn’t necessarily mitigate problems of food security. I think the only solution is a stockholding strategy.

Holding stocks in the destination country reduces political risk and makes those stocks more easily financeable.

Will this trend continue? Will more state companies get involved in agricultural commodity trading?

It is not a clear trend just because we have three or four entities evolving in this way.

Before 1996, we had extensive state trading enterprises worldwide, but they have largely disappeared. Now there’s pressure to put some back together. I suspect many countries are evaluating this and trying to figure out what to do.

However, it’s essential not to overlook that the pressures on food security are primarily driven by climate change, weather, and logistical bottlenecks. In the 2023/24 crop season alone, we experienced reduced flows through the Mississippi and Danube Rivers due to drought. And we had problems in the Red Sea – all in one year.

Additionally, we face geopolitical pressures that result in tariffs or other forms of trade intervention. The issue of food security is paramount, and governments are under pressure to do something.

The recent unofficial Chinese embargo on U.S. soybean purchases has demonstrated that China wields significant influence over private importers. Does China need COFCO to achieve its objectives?

COFCO is technically a State Trading Enterprise (STE). It is similar in structure to the AWB (Australian Wheat Board) or the CWB (Canadian Wheat Board) of the old days, which had  government-backed credit guarantees. These bodies could direct trades that might not otherwise necessarily have been the optimal trades based on the market at that time.

The Chinese government could achieve its goals by collaborating with the private sector. However, to do that, they would need an intensive regulatory regimen to monitor all the different traders. It’s easier to do that via a single entity.

Russia now controls grain exports in the same way as it controls fossil fuel exports. Why have they done this, and will it be beneficial/efficient to the sector?

The Russian government is attempting to establish and replicate a model similar to its oil industry, where operations are concentrated in a single entity, Rosneft. That is, exploration, drilling, distribution within the country, and exporting. They have had considerable success with that model. They’re trying to accomplish the same with grains and oilseeds.

Following the 2014 takeover of Crimea and the first round of U.S. sanctions, we initially had 20 to 30 Russian trading companies; we have since evolved to just a few, which are heavily concentrated on domestic handling and exporting. The Russian government has also taken over management of private farms, although – and I may be wrong – they’ve not taken over ownership of those farms.

Will it be beneficial? I’m not sure I can answer that for certain. Agriculture is a complex field, and there are numerous risks to manage and control.

Will traditional agriculture commodity trading companies face financial stress due to an environment of low volatility, high stocks, reduced global flows, increased government intervention, and new local/regional players in different parts of the world?

I think you hit all the buzzwords there, and the answer to your question is ‘yes’.

Traders are heavily dependent on volatility. They make good, attractive returns when markets are volatile. There are several reasons for that, but when markets become less volatile, their earnings tend to decrease. And we’re already beginning to see this, at least in the Americas, with companies announcing reduced profits and layoffs.

How should the ABCD+ ag trading companies react – what strategies should they employ?

First, they must exploit economies of scale. Their costs decrease as they grow larger, which gives them an advantage relative to smaller players.

Second, supply chain management has become increasingly important. You must be efficient in managing the supply chain.

The third one is data analytics, and I use the word ‘analytics’ because I don’t want to say data. Early studies by Richard Cave showed that larger firms had an advantage because they had access to information that other firms didn’t have. Information is now universally and simultaneously available at low cost. Everyone has data; the challenge is to analyse it better than your competitors.

The fourth one is optionality. Successful firms must be masters of optionality. In grains and oilseeds, it means the ability to shift origins and destinations – a global book.

And lastly, managing risk and financial management will become increasingly important.

To varying degrees, governments are now active in a) trading, b) tariff policy, and c) biofuels policies, and an increasing percentage of trading company results now depend on government policies. Do you agree?

I agree that governments are increasingly intervening in the trade of agricommodities.

Biofuels are particularly important now in the Americas, Brazil, Europe and India. Agricultural commodity firms must be involved with biofuels in some capacity. They are a reality of life, and it’s just something that companies must live with.

How will technology, data and AI shape the profile of trading companies?

AI doesn’t change what you do; it enables you to make better decisions faster and quickly. In that context, it could be interpreted as a game-changer. We already see AI used in railcar loading and export terminal operations.

There are tremendous opportunities to utilise AI in supply chain management, particularly in managing inventories and maintaining a certain level of inventory at every point in the supply chain.

Every company is looking to utilise AI to make more accurate predictions about future prices or freight rates.

What should readers take away from this wide-ranging interview?

There are a few main takeaways, but the most significant one is that the agricultural commodity trading sector is highly competitive, or, in academic terms, ‘competitively fierce.’ We have a substantial and viable competitive fringe in addition to the traditional large commodity companies.

I don’t want to say it’s easy to enter the industry, because it’s not easy to enter any business. However, we’ve seen companies enter and be successful. It doesn’t mean it’s easy, but it means it is possible, and that’s a vital fabric of this industry. Companies have been able to enter and find a way to be successful and persist.

Taken together, the bottom line is that the grain trading industry is far more dynamic and competitive than other studies have previously represented.

Thank you, Bill, for your time and input.

© Commodity Conversations® 2025

[1] Wilson, William W., David W. Bullock, and Isaac Dubovoy. 2025. “Dynamic Changes in the Structure and Concentration of the International Grain and Oilseed Trading Industry.” Applied Economic Perspectives and Policy 1–22. https://doi.org/10.1002/aepp.13524

 

Trends, Themes and Threats

The agricultural commodity trade is undergoing profound transformations, driven by shifting demographics, technological advancements, and global political dynamics. I recently delivered a talk highlighting some of the most important trends—and the disruptive “trend breakers” poised to reshape the industry. Here are eight of them:

 Population Growth is Slowing

World population growth is declining quickly everywhere—except Africa. An ageing population in most regions consumes less and makes different food choices, while Africa remains the only consumer market forecasted to grow strongly. This change prompts difficult questions: can Africa feed itself, or will it increase global food demand?

Security Supercedes Sustainability

In today’s volatile world, food security is becoming a higher priority than food sustainability. State-backed funds are increasing investments in major trading houses such as Olam, LDC, and AgriBrazil. Simultaneously, new regional, often state-owned, trading companies, such as Savola, are emerging. Established giants—the so-called ABCD+ group—are losing market share to these agile competitors. Meanwhile, China is expanding its investment footprint in the African agricultural sector.

The Climate is Changing

Climate change impacts both food security and sustainability equally. Public opinions remain divided: many stay silent, while sceptics persist. Companies are shifting from greenwashing to “green-hushing”—downplaying or concealing their sustainability efforts instead of promoting them.

Agricultural production is moving geographically. Climate change doesn’t necessarily mean less food, but it does mean that food will be produced in different regions than in the past.

Climate change opens up new trade routes, necessitating the development of new ports and specialised types of ships.

 Misinformation gathers Momentum

Specialists and scientists in important fields are increasingly marginalised by misinformation and the “Dr Google” phenomenon. This shift endangers the credibility of industry knowledge and public discussion.

The AI revolutionises how we work and what we do.

Artificial intelligence is increasingly shaping the sector, aiming to simplify and adapt analysts’ roles. New insights and efficiencies are achievable for those who adopt these tools.

Futures trading will become even more computerised. Computers trade with computers. May the best algorithms win!

Consumer Tastes are Changing

Consumer behaviour varies worldwide. In Western countries, meat consumption is decreasing, while vegetarians and vegans increasingly avoid ultra-processed products that imitate meat.

A growing backlash against ultra-processed foods—now often linked to obesity and bowel cancer—raises a provocative question: could ultra-processed foods become the “new tobacco” of the 1970s?

Geopolitical Tensions in World Trade

Trade is more politicised than ever, as tariffs and embargos like China’s recent soybean move remind us that food is never just food—it’s about power and politics.

The Democratisation of GLP-1 Drugs

The arrival of more affordable pill-form GLP-1 medications could truly be a game changer, making access more democratic and potentially transforming dietary habits worldwide.

These themes and disruptors are reshaping the landscape of global agricultural commodity markets. Remaining attentive to these signals is vital for everyone involved in the trade, from producers and analysts to policymakers and investors.

©Commodity Conversations® 2025

Good afternoon, Stephen, and welcome to Commodity Conversations. Could you please tell me a little about yourself, Czarnikow, and CZ App?

I’ve been involved in sugar since joining Czarnikow in 2008. At that time, we operated as a traditional sugar trading house, buying FOB and selling C&F. I was fortunate enough to join a highly regarded sugar analysis team. We had Toby Cohen, who led the team and is now at ASR, and Peter de Klerk, who is now at the ISO. It was a great place to learn.

Over time, Czarnikow has evolved. We have de-risked by moving away from the traditional trade house model. We no longer buy FOB to sell C&F but instead look to build long-term relationships with participants throughout the supply chain. For example, we offer services such as vendor-managed inventory, financing support and procurement assistance, working in partnership with many of our customers. The other significant change over the last 5 to 7 years is that we no longer operate solely in the sugar industry. As a business, we now provide a range of supply chain services across a broad spectrum of goods which are used by the food and beverage sector.

CZ’s analysis team has evolved, too. We strive to be as open as possible, sharing our thoughts online. We make data and analysis available for free on our platform, CZ App. We also offer subscriptions to our sugar analysis to help customers manage their price risk.

Let’s get to the heart of the issue: How do you measure sugar consumption?

It’s the most challenging job we face as sugar analysts. Even on an individual level, people often don’t know how much sugar they consume. If you ask me how much sugar I ate yesterday, I couldn’t tell you. I have no idea how much sugar I consume, and I’m in control of what I eat. This is true for everybody.

It’s partly because sugar appears in foods you wouldn’t expect, but also partly because people are poor at recalling what they eat.

And then, in some cases, when extensive scientific studies ask people to keep food diaries, individuals often under-report. Perhaps people sometimes feel embarrassed about what they’ve eaten over the course of a week.

The problem worsens as you gather more data, which is why a top-down approach is also challenging. You can often see how much sugar a country has produced and how much has been imported or exported, but you can’t really see how much is in a pipeline. Is it a large pipeline with a lot of stock, or a smaller one?

You can’t see how much is being spoiled or lost, or if the sugar quality is deteriorating, from a top-down perspective.

In some countries, you can be fairly accurate. For the UK, consumption is about 1.7 million tonnes, which might be accurate within roughly 100,000 tonnes, but there is no absolute precision in that figure. This makes it challenging to monitor changes in consumption in real-time.

You usually only realise that a change has occurred in consumption after a few years, when either your models break, or the sugar price behaves unexpectedly.

Some statisticians use sugar availability as a proxy for consumption. They consider production, imports, and exports to estimate consumption. However, you don’t know how much sugar is wasted or discarded in yoghurts, bread, or pastries, and similar products.

At CZ, we’ve always made the choice to assume that sugar has been consumed when it’s transformed into a finished good, for example, when it is added to a chocolate bar. This means we don’t need to track finished products across borders. However, it’s clearly not the case that the sugar is then consumed, because food is often thrown away.

People say that 20 to 30% of all food is wasted, with half of this happening at the retail or home level. Do you consider this when estimating consumption, or do you think, well, it’s gone, so it doesn’t matter if it’s wasted or consumed?

The latter. We say, okay, it’s gone. It’s been turned into something which can be eaten, so whether it is eaten or thrown away, that sugar has disappeared. Again, this is for simplicity. I don’t want to spend time calculating food waste rates for different countries.

Is global sugar consumption increasing, and, if so, at what rate?

When I started in 2008, Peter de Klerk told me that there was a rule of thumb that sugar consumption increased by 2% annually, with 1% attributed to population growth and 1% to wealth growth. If sugar prices became extremely high, or sugar becomes unaffordable, or the world goes into recession, then you can reduce that to one per cent.

In years when the sugar price is very low or economic growth is very high, you can raise it to 3%.

That rule of thumb held up well until about 2014, remaining effective throughout the high sugar prices of 2010 and 2011.

From 2014, something changed, coinciding with the introduction of the Mexican sugar tax. It received significant publicity, and it was around that time that greater attention was paid to whether sugar or fat was the dietary villain. Until the early 2010s, fat had been the focus, and everything was low-fat. Then, in the mid-2010s, the emphasis shifted, and sugar began to receive increased scrutiny.

Our statistics show that, from 2014 onwards, global sugar consumption has remained stable on a per-person basis. At best, total consumption has been growing at a rate of 1% per year, in line with population growth; at worst, when prices have been high or during COVID lockdowns, it has been below that rate.

I imagine there are many reasons for that.  Are sugar taxes one of them?

Sugar taxes, by themselves, have not caused a significant shift in consumer behaviour.

When sugar taxes are introduced, the prices of soda and chocolate bars increase. It has a short-term effect on consumer spending, but within a few months, consumers become accustomed to the new price, and their behaviour returns to its previous state. If there’s any effect from the tax on the demand for sugar, it’s short-lived.

Taxes influence consumption when manufacturers reformulate their products to avoid paying the tax. The UK implemented a tiered sugar tax based on the sugar content in a soft drink. Most manufacturers reformulated their soft drinks to reduce sugar and substitute it with alternative sweeteners, leading to around 100,000 tonnes less sugar consumption. The tax led to lower consumption, but not through changes in consumer behaviour.

The media has had an impact, as consumers are now better equipped to understand product labels and the contents of different products than they were 10 or 15 years ago.

In 2010, if I had stopped a consumer in most advanced economies and told them that there was sugar in ketchup or in some bread, most would have been quite surprised. Now, if I stop a consumer in most countries and say, ‘Did you know there’s sugar in ketchup?’ they would probably roll their eyes and say, ‘Yes.’

There has been a rise in awareness of the sugar content in various foods, prompted by media coverage and taxation. It has influenced behaviour.

In 2014, Czarnikow published a report indicating that the per capita consumption in the UK peaked in 1957 at 53 kilograms per person, declined to 48.5 kilograms in 1970, and further dropped to 35 kilograms in 2014. Do you still endorse those figures, and what has changed since then?

I believe those figures are generally accurate. We have been involved in the UK sugar market for over 160 years, which has allowed us to gather extensive data on the country’s sugar industry. Sugar consumption in the 1950s, 1960s, and 1970s was high, mainly through sugar in tea, home-baked cakes, and biscuits, rather than in processed foods. Today, sugar is primarily consumed through processed products.

The decline has persisted since 2014. The UK population is approximately 70 million, with an annual sugar consumption of around 1.7 million tonnes. This results in a consumption of roughly 25 kilograms per person.

In countries such as the United Kingdom and Australia, sugar intake has been falling for several decades and is approaching 25 kilograms per person.  Consumption in developing economies is increasing rapidly and should help offset this decline. They are approaching 25 kilos per person from the other side. For example, in India, sugar consumption is rising to the mid-20s.

In general terms, the eight billion people on this planet consume about 180 million tonnes of sugar. This amounts to 22.5 kilos per person annually.

There is still potential for China, India, Indonesia, and Pakistan to increase their consumption, but if you had asked me 20 years ago, I would have said they could reach 30 or 35 kilos on average; now, I believe 25 is a more realistic estimate.

Per-person consumption is declining in Western countries. Is the EU an exception?

The EU27 has a population of 450 million people and a consumption of 15.5 million tonnes.  It works out at 34 kilos per person. We may be seeing a decline in Northwest Europe that is being offset by Eastern Europe. Or the figure may reflect the high number of processed products made in the EU, which are then exported. For our statistics, that would count as European consumption, even if those products are consumed elsewhere. However, it is not clear.

What about the US, where you have sugar and HFCS? Is total per-person sweetener demand declining?

According to the US Department of Agriculture, yes. They believe that per capita consumption of caloric sweeteners, such as sugar, HFCS, and other syrups, peaked in 1999 at 157 pounds per year and has since declined to 121 pounds in 2024. Interestingly, through the 1990s, sugar consumption was stable, and the growth in sweetener consumption was primarily due to increased HFCS use. Since 2000, the use of HFCS has declined, but sugar consumption has shown a slight recovery. So American consumers are eating less sweetener, but more of that sweetness comes from sugar. President Trump’s recent announcement that Coca-Cola could use more sugar and less HFCS may continue this trend.

In my Sugar Casino book, I stated that the Brazilian per capita consumption was 62.5 kilos, the highest in the world. Was that figure accurate, and if so, why is it so high?

We currently estimate it at 46 kilos per person, down from 60-65 kilos 20-25 years ago. Brazil has always been among the highest per capita consumers.

This issue highlights our inability to accurately monitor consumption. I find it hard to believe, but that is what the statistics indicate. Other analysts have similar figures.

Per-person sugar consumption continues to decline in the developed world, but could it be that wealthier individuals are eating less sugar and exercising more, while less affluent people are consuming more processed foods, exercising less, and living in food deserts where local shops only stock soda and snacks? Is the average per capita consumption figure hiding significant variation across the population?

It’s possible. I haven’t seen any statistics that break it down by income or similar metrics. However, I can imagine that if you have a higher income and more free time, it’s easier to prepare meals from scratch using ingredients. Therefore, you’re more in control of your sugar intake compared to consumers of processed foods.

Has the slowdown in consumption growth impacted production growth? Are banks and international agencies less inclined to finance sugar production facilities than they were 20 years ago?

Not to my knowledge.

However, global sugar production has remained relatively stable for nearly 15 years. We have been producing about 175 million tonnes of sugar, give or take 15 million tonnes each year. The highest was 189 million in the 2017/18 crop year, and the lowest was 160 million. During this period, fluctuations have occurred in yields, acreage, and other factors; however, the overall trend has remained relatively consistent. Production has increased in Brazil, while it has decreased elsewhere.

Meanwhile, the world’s population has grown by a billion people, and global trade has expanded.

To what extent is ethanol responsible for that?

It has made a difference in some countries. India, for example, can now redirect 5 or 6 million tonnes of sucrose into ethanol production instead of sugar. However, Brazilian cane production has remained steady at around 600 million tonnes for a decade.

You might also argue that having 175 million tonnes of sugar production 15 years ago was simply too high. We faced overcapacity, and it took 15 years to eliminate it.

GLP-1 drugs appear to not only suppress appetite but also shift dietary preferences towards high-fibre, low-sugar foods. How will they influence sugar consumption? 

GLP-1 drugs diminish sensations of hunger and curb impulsive human behaviour. One study showed that people on Ozempic were 30% less likely to become addicted to nicotine. Another found that individuals on GLP-1 drugs have a lower risk of developing alcohol use disorder. From a sugar perspective, this means people binge eat less and prefer foods that are lower in calories.

It doesn’t seem to work only through metabolism. It also appears that these drugs involve the brain’s reward centres.

Weight loss can have a puritanical streak. Some argue you’re approaching weight loss incorrectly if you depend on GLP-1 drugs. They contend that one should eat less and exercise more, rather than relying solely on medication.

However, for at least the last 40 years, the standard advice for overweight people has been to eat less and exercise more. It is good advice, but just because it is good advice doesn’t make it easy to follow. Obesity has increased significantly over time. Yet, we now finally have a drug that seems to overcome the willpower barrier.

With patents expiring in some countries, it might be more economical for health authorities to provide free GLP-1 drugs to obese individuals rather than covering the costs associated with obesity-related health complications. I also observed that one company is developing a pill instead of an injection. I expect people will favour pills over injections, which could boost their usage.

We will probably reach a stage where the drugs become significantly cheaper, and you will be able to take them in tablet form.

The UK’s National Health Service estimates that obesity costs £11.4 billion each year. However, determining the exact figure is challenging due to related health conditions. Being obese doesn’t necessarily mean you will become ill, but it does raise the risk of developing type 2 diabetes, heart failure, joint problems, and other health issues.

There are an estimated 10 million obese adults in the UK, so providing these drugs free of charge would likely become more cost-effective as GLP-1 prices fall. I wonder if any government will implement this, but the cost-benefit analysis suggests they should. It’s worth considering, at least, whether patents should be bought out and these drugs made widely accessible.

Have you lowered your sugar consumption forecasts because of GLP-1 drugs?

We’ve made a small allowance for some countries, but there are still many aspects of GLP-1 drugs that we remain unaware of.

We estimate that around 5% of Americans are on GLP-1 drugs at any given time. However, this figure is fluid, as people start and stop them. We also know that the US is the world’s largest drug market, making up about 50% of global drug sales.

However, obesity is not just a problem for affluent countries. There are other countries, such as Malaysia, for example, which have high rates of obesity and type 2 diabetes.

Predicting the adoption of these drugs is difficult. Will we see a future where 10% of most populations are on them at any point in time? It’s possible. However, it’s equally likely that they are not widely used for some reason.

I haven’t seen any solid statistics indicating that when someone is on a GLP-1 drug, they consume a certain percentage less sugar. That research doesn’t exist. All we know now is that there will be an increased uptake of GLP-1 drugs in the future, and they might have some negative impact on sugar consumption; that’s about it.

However, we can’t ignore it. We must make some allowance. But all I know is that whatever allowance we make will be wrong. So, it’s just an indication now, a guide to what we think is happening.

We have reduced our US sugar consumption figures by 1% in 2024 and by 2.5% in 2025.

We will adopt a similar approach for Western European countries and Australia from 2025. If GLP-1 generics are produced in India and China at considerably lower costs within the next five years, we can then begin implementing reductions in consumption more widely across the globe.

A final consideration is that there are individuals who are superusers, highly dependent on processed foods. For example, 20% of consumers account for around 65% of American ice cream and chocolate sales. If you consume a lot of ice cream and chocolate, you may be overweight and more likely to be on GLP-1 drugs. If five per cent of the US population takes a GLP-1 drug, they could represent more than 5% of US sugar consumption. It’s not a direct one-to-one relationship. Even with a relatively small number of GLP-1 users, their impact on overall consumption can still be substantial.

Thank you, Stephen, for your time and input.

© Commodity Conversations® 2025