Global commodities trading is undergoing profound changes as banks pull out from the sector while trading houses adapt to new regulations and expand into physical assets. Top executives and co-owners of some of the world’s largest trading houses discuss new trends at the FT Commodities Summit in Lausanne, Switzerland this week. The following are some of their comments at the event. BUNGE LTD CEO SOREN SCHRODER On whether Chinese trader COFCO’s acquisition of assets in origination business will change the market: “I think it is wholly consistent with the food security strategy of the Chinese five-year plan. It makes all the sense in the world that COFCO China wants to be connected somehow directly to the source. My view is that COFCO will continue to buy and transact with all commercials in addition to these. China is bigger than one or two companies. But it is a way to deal with the fact that they no longer are claiming to be self-sufficient. It is a shift, but I really doubt it will dramatically change trade flows overnight.” CHRISTOPHER DELBRUCK, CEO OF E.ON GLOBAL COMMODITIES “I am pretty confident there will be no interruption on energy flows from Russia to Europe. It has not happened in the last 40 years. People omit the fact that there are 60 million tonnes of coal brought into Europe and there are (many) oil barrels coming in. Those two commodities play a role.” NOBLE GROUP CEO YUSUF ALIREZA On whether trading firms should adopt a more hybrid model, becoming involved with financing and buying assets too: “None of us should be arrogant enough to assume one model is right and one is wrong. As a CEO you need to decide what model is right for your firm and have conviction in that view. From a Noble perspective, our core competence is in the middle part of the supply chain ... We are not miners, we are not farmers, we are not a bank ... so our model is to partner with those guys rather than compete with them.” PAUL REED, CEO OF BP SUPPLY AND TRADING On financial regulation: “The threat to business can be quite significant if we get it wrong,” he said, adding that higher capital requirements were one of the biggest worries as they tied up vast amounts of additional capital for trading purposes. If interest rates went up around the world, this may reduce the ability of traders to hold sufficient stocks and that could become a threat to stability of supplies, he added. VITOL CEO IAN TAYLOR On Russia-Ukraine crisis: “Some of us are old enough to remember the end of the Cold War days. In the energy space, gas and oil have tended to continue to flow because it is in the interest of both sides that they continue to do so,” he said, adding he was more concerned about instability in the Middle East and a shutdown in supplies from Libya. GUNVOR CEO TORBJORN TORNQVIST On Russia-Ukraine crisis: “It is business as usual at Gunvor ... Russians are very pragmatic. Business and politics are much less integrated than you may think ... The current (Ukrainian) crisis will be contained.” MARCO ALVERA, SENIOR EXECUTIVE VICE PRESIDENT AT ITALIAN OIL MAJOR ENI, RESPONSIBLE FOR TRADING “Certainly shale gas is something Europe should do as opposed to resist. And we probably need to convince some of our suppliers that if gas prices do not come down, demand will disappear. Every new coal-fired power plant in Europe means fewer Russian jobs for decades. Europe collectively is in a stronger bargaining position than we think.” “There is shale gas in Ukraine. The cycle to bring it to production is three to four years. There is also conventional gas. There are opportunities for conventional gas in Ukraine that were planned to be exploited before the crisis ... There is not enough gas in Ukraine to shift the energy balance in Europe.” “On gas, we have potentially a much more serious problem in supply disruptions in Europe because of the Ukrainian situation. In relative terms the gas disruption is more serious than the oil disruption because it is much larger ... It is 30 percent of European demand.” PAUL CONWAY, CARGILL VICE CHAIRMAN On Chinese appetite for agricultural commodities: “The issue is scale ... In the next 10 years, they (China) could easily be the world’s largest importer of corn and wheat.” JUAN LUCIANO, PRESIDENT AND CHIEF OPERATING OFFICER, ARCHER DANIELS MIDLAND CO “We don’t have assets in Russia and this is something we want to correct over time.” He said ADM has assets in Ukraine, including facilities in the port of Odessa, a crushing plant and a small unit in Crimea. On Ukraine, he said: “We have had no problems so far ... So far, so good,” adding that good weather had allowed crop planting there to go ahead of plan. “We see the global economy actually accelerating in 2014 and 2015, driven mostly by the most developed economies ... and probably emerging markets broadly flat.” “When we look at the U.S. economy we see the fundamentals very solid - low inflation rates, we see a resilient housing market and actually we see some strength in industrial activity driven mostly by the energy revolution in the U.S., which is bringing a renaissance in the U.S. and not only in the Gulf Coast but also in the northern part of the U.S.” “In the case of China, they have just abandoned the objective of self-sufficiency in grain, which I think is a smart thing to do, because I think it’s taking too much of a toll on their resources. China has 20 percent of the global population ... As I think of them relying more on global markets, it makes sense that they have a strategy to have a higher ability to acquire, to originate grains around the world and trying to invest in infrastructure to facilitate the movement of grain because at the end of the day they are going to be an importer.”