Trading grains has become so tough that one of the oldest merchants in the business is venturing into the consumer breakfast market.
C. Mackprang jr., a Hamburg-based trading house founded in 1878, is supplying breakfast cereals as part of a joint venture it set up last year. The company sources products including oats, corn and raisins, then mixes and packs them before shipping out to China.
“We are looking for niches,” Jens Kass, Mackprang’s managing director, said in an interview in Hamburg on Monday. “Being a grain trader is no more the place where you make your money so easily. Definitely not. Times are changing and we have to look for other opportunities.”
As earning money from buying and selling grains becomes harder amid bumper supplies and reduced volatility, trading houses are increasingly looking toward potentially higher-value niche markets.
In addition to cutting costs or selling assets, some merchants have started trading foods including tomatoes or chickpeas, or even processing meat.
Joint Venture
Mackprang set up a joint venture with consultant RSBK AG in September last year. In addition to the cereals business, it’s also dealing in organic grains, molasses and sugar-beet pellets, which are used to feed cows and horses, as well as expanding into producing specialist feed mixes.
The German company, which is mostly owned by the Bohnhorst Group and sugar trader August Toepfer & Co., typically handled between 1.2 million and 1.4 million metric tonnes of grains and oilseeds a year before business slowed in 2016.
“There are more drastic changes coming to this market,” Kass said. “A lot of people, even when they are big, they are looking for new business.”
News by Bloomberg, edited by ESM. Click subscribe to sign up to ESM: The European Supermarket Magazine.
