Dynamic changes in the structure and concentration of the international grain and oilseed trading industry – Wilson – 2025 – Applied Economic Perspectives and Policy

Mergers, new entrants, and growth of competitive fringe

The major firms in the modern international grain trading industry were Andre, Bunge, Cargill, Continental, Dreyfus, and Cook. Each was a large private and family-controlled firm. Over time, some of these exited, others were acquired or became insolvent, and the remaining ABCDs were subject to public ownership or financial disclosure in varying means (e.g., as public stock-held firms, ESOPs, etc.). Since the 1990s, there have been numerous mergers, including of significance: Cargill acquired the assets of Continental in 1999, ADM had numerous acquisitions in the 2000s, Glencore expanded in grain in 2002 and acquired Viterra in 2012, LDC had several regional acquisitions in 2013 (InVivo & Soufflet, 2021; Marubeni & Gavilon, 2013; Viterra & Gavilon, 2022). The most recent is Bunge’s acquisition of Viterra, which commenced in 2023 and has been reviewed by most of the major grain producing and importing countries, and was approved by the EU in August 2024, and Canada in January 2025 (Government of Canada, 2025) subject to conditions. The outstanding review (as of early 2025) is that from China.

In addition, numerous firms entered the international grain trading industry, in addition to the new Chinese trading organization and Russian grain trading firms (discussed below). These new entrants and others ultimately form the competitive fringe of firms in international grain trading. Without being exhaustive, the new entrants can be classified into several categories, including cooperatives (e.g., CHS, Zen-Noh), STEs, and private enterprises. Japanese trading companies (non-STEs) include Marubeni, Mitsubishi, Itochu, and Korean trading firms Pesco, Daewoo, and CJ International Asia. In addition, Zen-Noh and Itochu own CGB (Consolidated Grain and Barge). Other noteworthy entrants include Noble, Olam, and Wilmar, referred to as the Asian Tigers or Merchants of the Orient (Wang & Li, 2010). In 2025, SALIC acquired the remaining shares of Olam Agri (Okoh On, 2025). Private commodity trading companies entered, including Phibro, Ferruzzi, Gavilon, Agrex (Mitsubishi), Glencore, J. Aron, BGT, ETG, Serentz, Atlas, Greenfield, Hartree Partners (ex-Goldman / HessGunvar), and Vitol. Others entered, including Grain Corp (Australia), Lansing Grain (now Andersons), Quadra (Australian Wheat Board [AWB] traders in Geneva), InVivo (who now owns Soufflet), and Copenhagen Merchants. Following the Russian invasion of Ukraine and the subsequent exit of some major players from Ukraine trading, several new Ukrainian firms expanded into trading and some later exited. Concurrently, there was an increase in the number of Russian grain trading firms.

These de novo and, in many cases, greenfield expansions into international grain trading indicate that entry is not prohibitive.⁶ Some were successful (e.g., Gavilon, Viterra, Glencore, and others); others were not and either exited or were acquired. In most cases, these firms realized (1) that trading and managing logistics of international grain trades are more complicated than envisioned (i.e., as compared to trading futures); (2) the importance of counterparty risk; and (3) that multiorigin optionality is important, each of which favored larger firms. Two significant additions to the above relate to the entry and/or expansion of trading for Chinese imports and Russian exports.

Evolution of concentration measures in international grain trading

Concentration in the international grain trading industry has been the subject of numerous earlier studies and books and, more recently, referenced in more popular studies and media. These are summarized in Table 1. Academic literature and industry references on concentration in international grain trading have evolved and are described below. These results vary widely in several responses. Some studies use international shipments, US export shipments, sales, or domestic shares. Most, but not all, of the studies use physical quantities. Not all of the studies were clear on these metrics.

The early academic study was conducted by Caves (1977/1978), who indicated a concentration ratio of 80% in international grain trading, although sources were not identified. Caves (1977, p. 109) indicated the CR4 for US domestic grain merchants at 33% and 21% in 1960 and 1972, respectively. Caves and Pugel (1982) suggested that for 1974/1975, an unofficial CR4 of 61%, 42%, and 41% for wheat, corn, and soybean, respectively. CR4’s fell for US exports to 1980/1981. Using data from NAEGA, the 1974 CR4 for wheat, corn, and soybean was 62%, 43%, and 53%, respectively. Thompson and Dahl (1979) indicated a CR4 of 85% and questioned the ability to coordinate pricing dynamically. McCalla and Schmitz (1979) indicated a CR5 of 90% in 1970. Using data from USDA Federal Grain Inspection Service (FGIS), Foltz et. al. (2002) indicated concentration ratios for US grain exports of 81%, 47%, and 65% for corn, wheat, and soybeans respectively. These studies are not all directly comparable, but they suggest relatively high concentration, and there has not been a noticeable change over time.

Several books allude to concentration in international grain trading. Freivalds (1976, p. 116) indicated a CR5 of 90% for the United States and 70% for world grain trading. Morgan (1979) indicated that the CR5 by origin country was 85%, 90%, 90%, and 80% for the United States, EU, Canada, and Argentina, respectively. He referred to the “pyramid of power” and the dominance of the prominent grain exporting firms (pp. 234–235). Gilmore (1982) reported values for US exports of wheat and corn at 96% and 90%, respectively. Sewell (1992, p. 127) indicated the concentration “…is largely due to these risks and pressures that the international grain trade became concentrated into so few hands…” Atkin (1992, p. 112) suggested that the five major grain trading firms account for 75% of international grain shipments but acknowledged that the exact figure is unknown. More recently, Kingsman (2021, p. 222) indicated that ABCD controlled 50% of the world trade in grain and oilseeds.

Other more recent publications have cited varying concentration measures in international grain trading. These measures, mainly from Murphy et al. (2012), indicate a CR4 of 73%. The basis of that study was an AWB reference.¹¹ Upon further investigation, it became clear that the study, which addressed privatizing the Australian grain trading industry, had significant limitations. The analysis summed the total revenues from public annual reports for Cargill, ADM, ConAgra, Louis Dreyfus, Bunge, CWB, and AWB and derived the share controlled by the largest firms. It was inferred from these data that these firms control 73% of the market share for international grain trading. However, this approach is limited partly because it is based on a priori firm composition and of firms having publicly accessible data. Further, using revenues as a proxy for market size in international grain trading would severely underestimate the market size, ignoring actual shipments and the impacts of competitive fringe. Specifically, the study only used data from the selected public firms. As a result, it ignores revenues, or more importantly, volumes, from the rest of the industry. Thus, the industry’s total size is underestimated, creating an upside bias to their CR4 estimate.

Other publications describe concentration in international grain trading (Anderson et al., 2023; Clapp, 2015; Harvey, 2022; Hietland, 2024; Murphy et al., 2012) indicating that concentration in international grain trading ranges from 70% to 90%. These references are important because they have been the subject of numerous stories in the financial trade press seeking to describe concentration in intentional grain trading (Farmer, 2017; Kokkinidis, 2023; Lawrence, 2011; Pina, 2017; Putz, 2018; Thomas, 2023). Each of these either refers to Murphy et al. (2012) or Clapp (2015) or does not provide a source, but each indicated the concentration in international grain trading is 70%–90%. Most of these studies claim that concentration has escalated, which has had adverse consequences. Murphy et al. (2012) indicated, “these four firms are decisive actors in the global restructure of the overlapping food, feed, and fuel complexities.” Clapp (2015) indicated that “these firms have enormous power to shape key aspects of the global food landscape.” Public Eye (2019) suggests a connection to human rights violations. ETC Group suggested these firms “wield enormous influence over markets, agricultural research, and policy development, which undermines food sovereignty.”

Hietland (2024) suggested that these firms control the supply side through their large storage capacity, vertical integration, and so forth, and control the key export and import markets. Another indicated: “The fact that global commodity giants are making record profits at a time when hunger is rising is unjust and is a terrible indictment of our food systems” (Share the World’s Resources, 2022). Anderson et al. (2023) suggested that “big ag” was sufficiently large to influence regulations. Finally, Lianos et al. (2024) described concentration in the broader agricultural sectors (e.g., fertilizer, grain, seeds, etc.) and identified many potentially adverse consequences of further concentration. In the case of international grain trading, they referred that “the ABCD companies … hold substantial market shares, which heightens the risks associated with food security” (p. 41), and refer to the 73% CR4 as referenced above. No new evidence about concentration in this industry was provided.

CR4s and Herfindahl–Hirschman index

Table 2 summarizes the results, and Figures 1–4 illustrate the market shares of each firm from 2020 to 2023. These figures display only FOB shipments (with differences for CNF shipments outlined), covering all origins and destinations for the specified commodities, including China imports and Russian exports. Due to space constraints, only the top 20 firms are represented in the figures.

Generally, the market share of the four largest firms is around 30%, though this varies by commodity and country. The aggregate CR4 for FOB and CNF shipments is 32% and 27%, respectively. These averaged 33% during the first 3 years but fell to 27% in 2023. In all cases except for US exports, FOB shipments are less concentrated than CNF shipments. The four firms with the largest market share for FOB shipments are Cargill, COFCO, ADM, and LDC, while the leaders for CNF shipments are COFCO, Bunge, ADM, and Cargill. Therefore, there is a distinction in market leaders between FOB and CNF shipments.

Figure 2 illustrates the market shares for shipments to North Africa, included due to its being one of the largest and fastest-growing markets. Egypt, often one of the biggest importers, is included in this region. The market has a CR4 and HHI for FOB imports of 26% and 387, and CNF shipments of 22% and 415, respectively. Several notable changes occurred in this import region. The CR4 decreased from 30% to 27% between 2020 and 2023, while the CNF CR4 dropped from 26% to 19%. Furthermore, the largest Russian trading firm in this market, Solaris, improved from 11th to 5th largest between 2020 and 2023.

The outcomes differ for China’s imports, where CR4s are higher at 44% and 39% for FOB and CNF shipments, respectively. Cargill and COFCO lead in FOB shipments, while COFCO and ADM dominate CNF shipments.

There have been drastic changes in Russian exports in recent years, resulting in Western firms exiting and Russian trading firms becoming more important (as discussed above). The largest firms for FOB shipments are Trade House RIF, Aston, Grain Gates/Mirogroup, and United.¹⁹ For CNF shipments, the largest firms are Solaris, Aston, GTCS, and Viterra. The market structure for Russian exports continues to change with further consolidation of exporters. When evaluated for individual years, the CR4 increased from 33% to 44% for FOB shipments in 2020 and 2023, respectively. Trade House RIF was the largest firm each year, and Cargill fell from the fourth to the eighth largest firm. CR4s for CNF shipments range from 29%–35% with no apparent trend. However, the largest firms shifted from 2020 to 2023, with Aston, GTCS, Solaris, and Grainflower being the largest firms in each year, respectively. Cargill became much less important (at the eighth largest).

Taken together, there have been some notable changes through time. Those of particular importance include (1) the growing penetration of COFCO for CNF and FOB China shipments and decreases by Cargill and ADM; (2) radical changes in Russia and reduction in western firms, particularly for wheat; and (3) the increase in non-Majors.

In general, these results indicate that the international grain trading industry is highly competitive. Or, these results suggest the intensity of price competition would be “fierce” (Besanko et al., 2016). There are numerous prospective reasons for this, including: (1) entry seems relatively easy or accommodative; (2) large, sophisticated and well-informed buyers with low switching costs; (3) limited product differentiation, among others. Indeed, the competitive fringe of this market has grown and is much greater than previously depicted. Based on the value of HHI, there is no reason to expect that any firm would be able to exert market power or, taken together, operate as an oligopoly.

The concentration levels reported here are significantly lower than those in previous studies, which suggested an aggregate CR4 of 73%. CR4s vary considerably across countries and commodities, and the firms identified as largest differ. Several factors contribute to this difference. First is the period: our analysis covers the most recent years and is summarized from 2020 to 2023. The latest publications include unpublished studies from the early 2000s. Much has changed in this industry during this time, particularly with the rise of competitive fringe players, including Chinese and Russian trading firms. Second is the scope of analysis. Earlier studies relied solely on data from the United States, and the AWB (2004) study, which served as a foundation for others, utilized revenue data that are now outdated and is limited as discussed above. This study considers all origins and destinations, reporting an aggregate of grain commodities as shown in Table 2. Third is the metric used. Earlier studies employed export data from the 1970s to the 1980s for shipments from the United States. The other recent study inappropriately inferred market shares from the revenues of the presumed leading grain trading firms. In this study, we utilize actual export shipments, which offer a more precise measure of trade and concentration. Finally, we derived CR4s in this study as they are commonly used to infer market structure and are comparable to previous studies that derived CR4s. In addition, we derived HHI’s, which is a more suitable measure of concentration and potential market power.

Cluster analysis

The international grain trading industry has evolved to be called ABCD, implying an industry dominated by these four firms. Another interpretation is that a single cluster comprises these four firms. Cluster techniques can be used to more formally and statistically determine the composition of clusters, or more commonly referred to as “strategic groups” within an industry. Cluster analysis was used in this study to analyze the structure of the international grain industry and to more formally determine the number of clusters and the composition of firms within each cluster. The k-means clustering model assumes that the data can be partitioned into a predefined number of clusters, k.

The variables used to delineate clusters included: (1) the total number of shipments, (2) the number of origins, (3) the number of destinations, (4) the number of FOB shipments, (5) the number of CNF shipments, and (6) whether the firm trades wheat, corn, and soybeans. K-means clustering was employed to segment firms into clusters that reveal patterns of strategic positioning. Additional variables were also tested, such as whether the firm trades in small grains, the number of shipments over time, geographic factors like continents or dependence on specific trade routes, and the average shipment size by volume. However, these additional variables were found to be insignificant and were omitted from the final analysis.

The number of clusters was determined using the Silhouette score. The Silhouette score assesses the quality of clusters produced by clustering algorithms. It measures how similar an object is to its cluster (cohesion) compared to other clusters (separation). For each point, the silhouette score ranges from −1 to 1, where a higher score signifies better-defined clusters. A score close to 1 indicates that the point is well matched to its cluster and poorly matched to neighboring clusters. In contrast, a score near −1 suggests misclassification. By averaging these scores, the silhouette score aids in identifying the optimal number of clusters and validating clustering outcomes. The k-means algorithm then iteratively assigns each firm to a cluster by minimizing the variance within clusters, effectively grouping firms with similar trade characteristics. The Python library Scikit-learn was employed in this paper with its k-means clustering algorithm (Pedregosa et al., 2011).

The results are summarized in Table 3, with the Silhouette scores depicted in Figure 5. The Silhouette scores reveal the presence of three clusters of firms in the international grain trading industry. Cluster 1 consists of seven firms, contrasting with the traditional taxonomy of ABCD. In addition to ABCD, it also includes COFCO, Viterra, and CHS (ABCCCDV). These firms account for 45% of global FOB shipments, much lower than the earlier studies that derived CR4s for ABCD only. This finding is fundamental in understanding the structure of the international grain trading industry. Cluster 2 comprises nine firms with similar characteristics and many other firms, which could be seen as the competitive fringe, a broad segment of similar firms. Finally, Cluster 3 contains many other firms, each individually small.

Cluster 1 consists of firms that manage a high volume of shipments. On average, shipments from Cluster 1 firms are 67 times those of Cluster 2 firms and 107 times those of Cluster 3 firms. Cluster 1 firms, on average, ship from 14.4 origins to 92 destinations, encompassing all commodities. This aligns with the strategic concept that firm size and trading across multiple origins and destinations are crucial in this industry. Cluster 2, in contrast, has much smaller shipment volumes, with these firms shipping from an average of 1.8 origins to 11.9 destinations. Similarly, Cluster 3 differs because firms have limited origins and do not ship wheat, corn, or soybeans. Their shipments are primarily vegetable oils. Firms across all strategic groups ship both FOB and CNF, with the number of FOB shipments consistently exceeding that of CNF shipments. The significant difference between Clusters 1 and 2 underscores the importance of size and being multi-origin and multi-destination shippers.

These results are fundamental to understanding the structure of the international grain trading industry. First, rather than suggesting one segment called ABCD, there is a cluster comprising seven firms with similar characteristics. Second, a large group of other firms differ but have similar structural characteristics. These firms would be the competitive fringe. Finally, there is a large cluster (Cluster 3) with many small firms that do not handle wheat, corn, or soybeans. Taken together, this can be interpreted as an industry comprised of clusters, one of which represents larger firms that ship from a large number of origins to a large number of destinations. The competitive fringe is more complicated, as there are two clusters with many firms. The impact of the competitive fringe has not been included in earlier studies. However, as noted here, the competitive fringe is important and impacts the structure and conduct of the international grain trading industry.