Louis Dreyfus to deepen sugar trading in Africa

By Jonathan Saul

GENEVA (Reuters) - Louis Dreyfus Company, one of the world's largest agricultural commodity players, is bolstering sugar trading in Africa as it contends with heightened competition and depressed prices, a senior company official said.

Narrowing margins for sugar and other food commodities like grains in recent years have put pressure on profitability for Archer Daniels Midland (ADM), Bunge, Cargill and Louis Dreyfus - dubbed the "ABCDs" of the agricultural world because of their initials.

"Africa is the future, and one of the places where we see growth possibilities," said Enrico Biancheri, head of sugar trading worldwide with Louis Dreyfus (LDC).

He said the push in Africa, which will involve supplying the region with sugar from places such as Brazil, was part of the group's review of its sugar operations.

"Sugar is core for LDC," he told Reuters on the sidelines of the Platts Kingsman sugar conference in Geneva this week.

"We decided that either we adapt and change our business model, or we lose."

The role of Dreyfus and other major players in the sugar market has been challenged by the emergence of new rivals, particularly from Asia.

"In the last six to eight years, the sugar business has become more competitive. New, integrated, players such as (China's) COFCO and (Singapore's) Wilmar have emerged, alongside smaller trade houses, specialised in niche markets," Biancheri said.

Rising production in India, Thailand and the EU has led to an oversupply of sugar in the world market and white sugar futures on ICE fell to their weakest level in more than nine years on Wednesday, while raw sugar slipped to a 2-1/2 year low.

"West Africa is the most open market especially for LDC, which has a significant presence in Brazil," he said.

"Brazil trades white sugar, is a significant exporter of white sugar, and is quite engaged with the West African countries."

West African countries such as Ghana have already become key destinations that exporters such as Brazil and also the European Union are trying to target.

Nigeria is the largest importer in sub-Saharan Africa and is forecast to import 1.59 million tonnes of sugar in the 2017/18 season versus 1.54 million tonnes in 2016/17, according to estimates by the International Sugar Organization.

Ghana is forecast to need 346,000 tonnes of imports in 2017/18 from 325,000 tonnes in 2016/17, ISO data showed.

He added that the EU, with its shift to become an exporter, south east Asia, China and Brazil were also areas the group was focused on.

Louis Dreyfus - which originates raw and bagged white sugar from locations including Thailand, India, Australia, Europe, Brazil and Central America - declined to give details on trading volumes.

The group announced a management shake-up this week and was also enlarging its senior leadership team.

(Additional reporting by Nigel Hunt; Editing by Alexandra Hudson)