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LAUSANNE, Switzerland, March 28 Top executives
from the world's largest commodity trading houses discuss trends
in trading at the FT Commodities Global Summit in Lausanne,
Switzerland, this week.
The following are highlights:
DAVID MACLENNAN, CHAIRMAN AND CEO, CARGILL:
"Trade policies coupled with foreign aid and sound
development policy is critical. Today's global proliferation of
a me-first trade posture threatens to destabilise decades of
progress in negotiating."
"We all have to make the case for free trade," he said,
arguing that "we have to help political leaders speak to their
MacLennan has yet to be invited to meet U.S. President
Donald Trump but would engage in debate with the U.S.
administration over trade and immigration. "I don't want to sit
in the bunker for 4 years," he said.
Cargill sees the United States as a clear beneficiary of
global trade, and in agriculture one-third of farmland is
planted for exports, while the NAFTA agreements has helped
Canada become the No. 1 market for U.S. agricultural exports and
Mexico the No. 3. "Countries can source their agricultural
products elsewhere if they're not getting them from the United
States," he said.
Training would be important to adapt to the uneven benefits
of trade, while "inclusive and responsible" immigration policy
would also be vital, he said. Cargill has 1,000 unfilled
positions at meat plants in the United States.
RUSSELL HARDY, EMEA CEO, VITOL
"This year we're expecting around 1.4 million barrels per
day of product demand growth - that's very similar to last year,
in line with GDP growth which is pretty positive everywhere.
Overall that's a very good story and that's going to allow, will
allow markets to begin (the) stocks draw that everyone is
"Border tax is complicated. It's tricky to assess impact on
oil price. If it were to be implemented, it would create a lot
of arbitrage on imports in the first period of time and a price
increase in the U.S. I don't think it's a great idea as U.S.
consumers will have to foot the bill."
"There's a feeling that stocks aren't really drawing as they
were expected, so (there's a) need to extend (production cuts) a
bit further to eat into 300 million barrel cushion ... At $50
per barrel there's a lot of incentive to continue policy, at $60
per barrel, no. It'll depend on how fundamentals exert
themselves in the second quarter."
Brent oil futures were at $51.17 a barrel at 1035 GMT.
MARCO DUNAND, CEO, MERCURIA
"I think a lot of eyes are looking at Russia at the moment
... Russian compliance hasn't been 100 percent. I think a lot of
the onus is on Russia to show that they are serious about this.
If Russia comes to the fold with non-OPEC then we'll see a floor
of $60 per barrel."
"Clearly, we saw a reaction to higher prices following the
last OPEC meeting and a pickup in (U.S. shale) production no
doubt. But at the same time, because the cycle for shale is very
short, what it does is it prevents companies to invest a large
amount of money into bigger projects that have a longer cycle."
"While the shale producer responds very quickly to the
higher price, most of them are hedged, therefore they have
pushed the back end of the curve down. In the same way, this is
going to prevent bigger projects coming around the world and I
think we are going to have a supply shock probably in next two
to four years."
TORBJORN TORNQVIST, CEO, GUNVOR GROUP
"Our company has concluded transactions with Iran, it's very
complicated ... Very strict regulations on what you can do - has
to be absolutely without any touching of U.S. dollar."
Tornqvist added it was easier to sell to Iran, which Gunvor
does in euros, but harder to buy. He does not see any
improvement in the short term.
"There is an underestimation of how much electric cars can
penetrate mainstream driving. Not everywhere, but in places like
Europe where you use cars for short driving ... Like Holland.
Costs are coming down."
JEREMY WEIR, CEO OF TRAFIGURA:
Called Trafigura's acquisition of Indian refiner Essar Oil
in partnership with Rosneft and investment fund UCP as
a strategic investment for both international trade and domestic
"We just have to see a slight increase in (vehicle) demand
numbers to see an enormous increase in gasoline consumption," he
said of Indian demand.
WILLIAM REED, CEO, CASTLETON COMMODITIES
"We don't have plans to add big a acquisition to that. We'll
bring in a strategic partner at some point to help us grow the
asset," he said, referring to the acquisition of Anadarko's East
Texas gas producing assets.
ERNIE THRASHER, CEO, XCOAL ENERGY & RESOURCES ON TRUMP:
"I think he'll get the infrastructure through because it
means jobs to people, and maybe that's where the coal miners go
to work, fixing infrastructure. The infrastructure in the U.S.
is a North American phenomenon, not a global phenomenon.
But I think indirectly the impact on the global commodity
markets could be the U.S. dollar. If you get this strong dollar
from the loose monetary or fiscal policies it will have a bigger
effect on global commodity markets than the actual
infrastructure spending in the U.S.
Regarding U.S. coal mining, he said: "You have an industry
that was producing 1.1 billion tonnes, it's on track to produce
680-700 million, so there has been tremendous rationalisation
"However on the demand side the customers have found an easy
exit from coal with low cost natural gas and we have prolific
reserves of cheap low cost natural gas," he said.
"I would like to think that President Trump's intentions are
good to put miners back to work, but the government can't
dictate to the market."
JAY HAMBRO, CHIEF EXECUTIVE INDUSTRY, ENERGY & MINING,
SIMEC GROUP LIMITED:
"I think he (Trump) is doing and says about doing
infrastructure investments that obviously drives demand and
makes the investment less risky. But I wouldn't follow his lead
on a commodity price bump any further.
JEAN-SEBASTIEN JACQUES, CEO RIO TINTO
Jacques said that the price of iron ore later this year
would be hard to predict owing to Chinese spare capacity.
"Chinese domestic iron ore production was slightly more than
400 million tonnes a year ... Today, we believe production is at
260-270 million tonnes a year ... but there's a lot of idle
capacity and the big question is, as and when winter is behind
us, are they going to restart capacity? It's difficult to read
the situation ... a lot is privately owned."
"Licenses are under threat. Even in Australia, yes the
outcome was a positive one, but until two weeks ago there was a
risk of a potential big tax burden. Across all geographies ...
government and communities want a bigger share of the cake."
Jacques said that the above issue has become heightened due
to the increased use of technology as it impacts jobs.
"We have the largest fleet of autonomous trucks ... There
will be fewer and different ones so we'll need to retrain those
people ... We will not be able to or slow down the rise of
(Reporting by Julia Payne and Gus Trompiz; Editing by Mark
Potter and Louise Heavens)