Commodity traders come in all shapes and sizes, but commodity trading firms can be and often are juggernauts. In the last year alone, the top 10 global commodity trading firms brought in $1.3 trillion in revenues. According to the Financial Times, a report commissioned by the Global Financial Markets Association, whose members are the world’s largest banks, wanted to gather evidence on why commodity trading houses should be regulated like banks. This might have been related to the drop in revenues by the top 10 banks’ commodity trading revenues to a “paltry” $1.2 billion. However, it appears the report, written by Craig Pirrong, professor of finance at the University of Houston, didn’t find the evidence the banks hoped they would. According to the FT, “it is unlikely that a large loss suffered by a single global commodity firm…poses a systemic threat to the broader financial system,” and that “the nature of commodity trading, and the structure and capital structures of commodity trading firms makes them substantially more robust to [a financial crisis] than systematically important financial institutions,” like Wall Street banks or big insurance companies, which are the groups largely held responsible for the 2008 financial system melt-down. The report was never published, but here’s our take on the identities of the “smart money.”
2012 revenues: $60.9 billion
2011 revenues: $58.7 billion
CEO: Soren Schroder
Executive Chairman: Alberto Weisser
Founded: 1818 by Johann Peter Gottlieb Bunge in Amsterdam
Headquarters: White Plains, N.Y.
Focus: Oilseeds and grains, produces sugar and ethanol, mills wheat and corn to make ingredients used by food companies and sells fertilizer in North and South America. Clearing member of the Chicago Board of Trade (CME Group).
Bad behavior: Recently five top executives at its India unit resigned during an internal audit into possible financial irregularities. Also has been accused of deforesting the Brazilian rain forest. In 2011, Bunge was fined $550,000 by the CFTC for a 2009 pre-opening trade that were fishing for prices and not "true and bona fide" trades.
FY 2012 revenue: $ 89.03 billion
FY 2011 Revenues: $80.6 billion
CEO: Patricia Woertz
Founded: 1902 in Minneapolis, Minn., by John Daniels and George Archer
Headquarters: Decatur, Ill., listed on the NYSE
Focus: Oilseeds, corn processing, agricultural services, storage and transportation, wheat milling, cocoa processing and food ingredients business. Recently finalized a takeover of Australia-based GrainCorp for $3.1 billion. ADM Investor Services is a clearing member of the CME Group exchanges.
Bad behavior: Who hasn’t heard of the famous price fixing scheme of lysine and citric acid in the 1990s? ADM ended up paying a then-record of $100 million anti-trust fine. The story was captured on film in “The Informant!” in which ADM executive and whistleblower Mark Whitacre worked with the FBI to uncover price fixing. More recently ADM has been charged with violations of the Foreign Corrupt Practices Act, in which it was accused of bribing foreign officials. Reportedly, the firm has set aside $25 million in potential fines.
8) GUNVOR GROUP
2012 revenue: $93 billion
2011 turnover: $87 billion
CEO: Torbjörn Törnqvist
Founded: 2000 by Swedish oil trader Torbjörn Törnqvist and Russian businessman Gennady Timchenko
Headquarters: Registered in Cyprus. Trading offices in Geneva, Switzerland, Singapore, Dubai and the Bahamas
Focus: The principal commodities traded are refined petroleum products (fuel oil, gasoil, gasoline, naphtha, and LPG), crude oil, coal, natural gas, LNG, biofuels, carbon emissions and grains. Gunvor also opened a metals desk in 2012.
Bad behavior: Seems like Gunvor’s questionable behavior is its bedfellows as it is aligned closely with the Russian energy markets. There was a report in the Economist in 2010 that alleged that Gunvor was manipulating Platt’s data on Ural oil to push prices down to purchase the oil and sell it at full price on the international market. These allegations were denied by both Gunvor and Platt's.
7) NOBLE GROUP
2012 revenue: $94 billion
2011 revenue: $80.7 billion
Chairman: Richard Elman
Founded: 1986 by Elman
Headquarters: Hong Kong, China. Listed in Singapore
Focus: Noble Group markets, transports and processes energy, minerals and ores and agricultural products including softs, grains and oilseeds. Recently the firm forged into the United States to enter the natural gas pipeline and storage business. Its second largest shareholder after the Elman family is China Investment Corp. with a 15% stake.
Bad behavior: Difficulty in finding a successor to take over for Founder and Chairman Richard Elman, a British-born self-made man, who, from news reports, seems to have a Warren Buffet-type personae with an edge. At one point he stated his firm was run by PCS — plain common sense. In April, after two ill-fated attempts, Noble Group announced Elman’s latest choice to take over for him: Yusuf Alireza, 42, who was co-president of Goldman Sachs' Asia unit excluding Japan. Noble Group also just pinched JP Morgan's head oil trader Jeff Frase to head up their oil liquid's trading in Connecticut.
2012 revenue: $98 billion
2011 revenues: $75 billion
President and Group CEO: Marco Dunand
Founded: 2004 by former Phibro executives Marco Dunand and Daniel Jaeggi
Headquarters: Geneva, Switzerland
Focus: Mercuria is largely a physical trader of energy such as crude oil and its products like fuel oil, middle distillates, naphtha and gasoline, as well as electricity, natural gas, coal and biodiesel. It has set up base metals trading desks in Shanghai and London, as well as added softs to its trading portfolio.
Bad behavior: Nothing we could uncover. Recently the EU Commission did approve the acquisition of Dutch petroleum products and biodiesel storage firm Vesta Terminal BV by Chinese oil major Sinopec and Mercuria.
2011 revenues: $115 billion (Forbes) Privately held
Chairman and CEO: David Koch
President: Charles Koch
Founded: Winkler-Koch Engineering co-founded by Fred Koch in 1925.
Headquarters: Wichita, Kansas Focus: Koch is largely into coal and oil refining and transportation, petrochemicals, forestry (Georgia-Pacific) and paper as well as ranching.
Bad behavior: The Koch brothers are famous for their conservative activism in commentary, donations to Tea Party candidates and more recently, for looking to buy media outlets to spread their word. They have been mostly vocal on discounting evidence of global warming caused by industrial or carbon-based fuels. In 2008 their own investigator found evidence of kickbacks in their French office paid by the local office to win contracts. The Koch investigator was fired because of “incompetence,” according to court papers. Bloomberg Markets found that from1999 through 2003, Koch Industries was assessed more than $400 million in fines, penalties and judgments. In December 1999, a civil jury found that Koch Industries had taken oil it didn’t pay for from federal land by mis-measuring the amount of crude it was extracting. Koch paid a $25 million settlement to the U.S. In addition, Koch was accused of selling products to Iran, despite the U.S. trade ban, activity it denies occurred during the ban.
2012 revenue: $120.4 billion
2011 turnover: $121.6 billion
Chairman and CEO: Claude Dauphin
Founded: 1993. Claude Dauphin, Eric de Turkheim and Graham Sharp. It split off from a group of companies run by Marc Rich.
Headquarters: Geneva, Switzerland
Focuses on: Largely energy-based, the company also focuses on non-ferrous metals trading and shipping.
Other: In 2009, Trafigura and lawyers representing about 30,000 Ivorians agreed on a pre-trial settlement to end a class action lawsuit, which had accused the firm of causing illness by dumping toxic waste in water off Ivory Coast in 2006 in the so-called “Probo Koala” incident. It appears that Trafigura paid a $198 million settlement to the Ivory Coast government. It also agreed to pay a $1.7 million fine for the illegal dumping ordered the Dutch court.
2012 revenue: $133.9 billion
2011 revenues: $119.5 billion
CEO: Greg Page
Founded: 1865 by William Wallace with one grain storage silo in Iowa.
Headquarters: Minneapolis, Minn.
Focus: Privately held Cargill is famous for its agribusiness, but also is big in energy, foodstuffs and biofuels production, as well as products such as steel and salt.
Bad Behavior: Also implicated in oil-for-food program bribes to Iraq although denied the allegations. In addition, the firm has been criticized for destroying rain forest in Brazil to build a soy processing port, as well as blamed for labor rights in Indonesia in connection with its palm oil plantations.
2012: Revenue: $236 billion
2011 revenue: $186 billion
CEO: Ivan Glasenberg (pictured)
Founded: 1974 by Marc Rich as Marc Rich & Co.
Headquarters: Baar, Switzerland.
Focus: Despite having significant coal, metal and oil assets, Glencore revenues are dominated by trading activities as the company had total revenues of $186 billion in 2011, of which trading brought in around $172 billion, including $115 billion in energy trading, $43 billion in metals and minerals trading and $13.7 billion in agriculture trading. It is both a producer and marketer, and in May 2013 finalized its merger, or more accurately, takeover of Xstrata, the multi-billion dollar mining company. From Foreign Policy magazine, when Glencore went public last year, its IPO revealed: “The company controlled more than half the international tradable market in zinc and copper and about a third of the world's seaborne coal; was one of the world's largest grain exporters, with about 9 percent of the global market; and handled 3 percent of daily global oil consumption for customers ranging from state-owned energy companies in Brazil and India to American multinationals like ExxonMobil and Chevron.”
Bad behavior: Born of infamous commodity trader Marc Rich, Glencore always has been attached to troubling rumors, including allegations of kickbacks for Iraqi oil to doing business in apartheid South Africa to contributing to serious pollution in Zambia as well as working with known dictators around the globe who would make a deal. It even has as its interim chairman during the Xstrata integration Tony Hayward, who headed up British Petroleum during its massive oil spill in the Gulf of Mexico.
1) VITOL GROUP
2012 revenues: $303 billion
2011 revenue: $297 billion
President and CEO: Ian Taylor
Founded: 1966 by Ian Taylor
Headquarters: Geneva, Switzerland; Rotterdam, the Netherlands
Focus: Privately held Vitol is the world’s largest physical oil and gas trader. According to the firm, crude oil is the largest part of its energy portfolio, stating that in 2012 it sold 117 million tonnes of crude oil, which amounts to around 2.4 million barrels per day. However, it also does trade other commodities including sugar, metals and grains. In fact, a news report stated it took delivery of 144,000 metric tons of raw sugar traded on ICE in July. And in April 2013 it announced the formation of a new group that would trade in grain and other agricultural commodities based in Singapore and Geneva.
Bad behavior: Vitol was found guilty in 2007 of grand larceny related to the United Nations’ oil-for-food program in Iraq, It agreed to pay a total penalty of $17.5 million.