Cargill's UK-based traders leave the company - market sources
Agribusiness giant Cargill is reportedly pulling out of the UK power and NBP wholesale gas markets, ICIS Heren understands.
The company made some internal structural changes late last year, which included cutting 2,000 employees globally because of economic weakness worldwide.
Sources said that the company has abandoned its UK power and NBP gas desks altogether and a number of traders for those markets known to ICIS Heren have left the company in recent months. One UK power trader said that company's books have been handed to a broker to "flatten out".
"We recently restructured elements of our European energy operations," said Niels Den Nijs, head of Cargill's gas business in Europe, the Middle East and Africa.
"This has included consolidating our European gas and power trading operations in Geneva, which is where these businesses have been headquartered for some years. We will continue to trade power but our emphasis will be on growing our natural gas business in Europe."
Cargill would not comment directly on the specific reports around UK trade.
The company launched a new brand called U&us, and Nijs said that Cargill is adding to its natural gas physical and trading teams. This means the company is moving from prop trading to more customer-focused business.
"A lot these big conglomerates are culling non-core proprietary trading businesses," said John O'Dwyer, who is eg1's head of commodities, and a former gas trader with Cargill UK.
"Prop trading desks are finding it difficult to match returns from 2006-2009 period and the cost of 'internal' credit has doubled since 2010, so Cargill is unfortunately mirroring the market."
Banks such as Crédit Agricole are reported to be scaling back trading in the energy markets in wake of the higher costs of credit and salaries (see EDEM and ESGM 16 December 2011). FOR
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