Glencore Share Price: Commodity Giant Makes Big Push into Cotton

on Jul 11, 2013
Listen Thursday, July 11th: Switzerland-based Glencore Xstrata PLC (LON:GLEN) will buy more than half of U.S. cotton exchange stocks, a purchase worth more than $150 million, in the commodity trader’s biggest push into fibre since losing $300 million in the volatile market three years ago, Reuters reported yesterday.

Quoting unnamed U.S. traders, Reuters said that Glencore would take 400,000 bales of cotton against the July contract that expired on Tuesday on ICE Futures U.S. This will represent the largest delivery for a July contract in at least five years, removing more than half of certified exchange stocks from the market and potentially fuelling concerns about shrinking U.S. supplies and a small U.S. crop due to a drought heading into the 2013/14 season on August 1.

The purchase also marks a comeback for Glencore from the turmoil of 2011 when volatile prices caused an unprecedented wave of defaults, shredded trust among traders, led to hundreds of millions of dollars in losses and triggered a high-profile personnel change. The volume, which represents about a fifth of the cotton Glencore sold last year, gives the commodity giant a large tonnage with which to compete with the bigger rivals. The company last year sold about 2.2 million bales of cotton, or 500,000 tonnes. Cotton is the smallest of Glencore’s three marketing divisions with earnings of $361 million in 2012, just eight percent of the group $4.5 billion total, which is dominated by metals and mining.

**Glencore Xstrata Seeking Buyers for Dakota Growers Pasta, Sources Say**
In another segment of its agricultural business, Glencore is looking to sell its Dakota Growers Pasta Co business as it continues to divest assets acquired from its $6 billion purchase of Canadian grain handler Viterra (TSE:VT) last year.
!m[Glencore Looking to Sell Dakota Growers Pasta Business ](/uploads/story/3887/thumbs/pic1_inline.jpg)

To ease Canadian regulators’ concerns regarding competition issues, Glencore has already sold a number of Vieterra assets to agribusiness Agrium (TSE:AGU), CF Industries Holdings (NYSE:CF) and Richardson. Reportedly, the Swiss-based group is now working with Barclays to sell U.S.-based Dakota Growers in a deal which could value the country’ third-largest pasta maker at $300 to $400 million, Reuters quoted inside sources as saying on Tuesday. Dakota Growers is likely to draw interest from companies like
America’s ConAgra Foods (NYSE:CAG) and Spain’s Ebro Foods (MC:EBRO), one of the sources had revealed.
**The Glencore share price in London was 3.98 percent higher at 268p as of 10:39 BST on 11.07.2013. The stock has lost almost 24 percent of its value since the beginning of the year.**