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Why additional organizations are finding success in global commodity markets

Several huge commodity trading firms are steadily playing a central function in worldwide commodity industries.

These previously unheard of companies aren't merely betting on costs or organizing merchandise shipments. They're taking on oil companies, miners and major Wall Street banks by investing billions of dollars into refineries, power plants, ports and other assets.

An assessment of company information by The Wall Street Journal found that earnings at these four trading organizations nearly doubled over the past five years to $816.4 billion. Over the same period, commodity-trading earnings at the leading 4 U.S banks involved in the sector fell 56 percent, to $3.8 billion, a decrease driven by slower trading and a retreat from some businesses amid harder policy.

"Commodity trading firms are becoming more visible and tougher to ignore" stated Craig Pirrong, a professor of finance with the University of Houston.

The 4 greatest traders-- Vitol, Glencore, Cargill and Trafigura -- each boast annual profits of well over $100 billion, positioning them in the ranks of household names such as Chevron and Apple.

In 2014 alone, Cargill, an agricultural trading business founded in 1865 and led by Executive Chairman Gregory R. Page, struck a deal with Brazil's Copersucar SA to make the world's biggest sugar-trading venture. The Mercuria Energy Group, led by President and Chief Executive Officer Marco Dunand, is an energy centered trader that did not exist 10 years back, yet recently agreed to buy J.P. Morgan Chase's physical-commodities company for $3.5 billion.

Agricultural trader Archer Daniels Midland, directed by Chairman, CEO and President Patricia Woertz, processes sufficient corn every day to make 99 million boxes of cornflakes. Mining-and-metals titan Glencore in June used its pull to organize a $1.3 billion loan to the Republic of Chad to assist its government to obtain Chevron's oil properties in the African nation.

<img src="http://upload.wikimedia.org/wikipedia/commons/0/02/Mariano_Marcondes_Ferraz_Trafigura.jpg" alt="Trafigura CEO Claude Dauphin" border=1 align=left style="float:left;width:300px;height:200px"></img>Investors are seeking opportunity. In their first set of public results, Trafigura, under the leadership of Executive Chairman Claude Dauphin, in 2013 posted record annual revenues of $2.18 billion and detailed a growth plan focused on benefiting from the United States oil boom. A Vitol crude oil-storage partner called VTTI Energy Partners LP recently registered to get $420 million by listing in the New York Stock Exchange.

Through a series of investments and acquisitions, the trading companies have come to hold authoritative positions in markets for vital resources ranging from sugar to oil to copper.

"They're always willing to work at a rate," stated Dario Scaffardi, executive vice president and general manager at Italian refinery Saras.

After the Fukushima catastrophe closed nuclear power plants in Japan in 2011, natural-gas rates rose as the country's demand for the fuel increased. Geneva-based energy trader Gunvor Group shipped 23 liquefied-natural-gas freights to Japan, more than 5 times the number it sent in 2010.

In 2013, Glencore and Vitol lent Russian government-owned oil enterprise OAO Rosneft $10 billion in return for 5 years of oil deliveries.

"These companies are playing a progressively critical function in the functioning of an ever more intricate international market," the FCA said in a February report.

At the same time, the organizations have to contend with intense rivalry and wafer-thin returns across the market. Agricultural trading enterprise Louis Dreyfus Commodities BV said revenues dropped 27 % to $640 million in 2013 after its grain company was struck by a serious drought. Vitol Chief Executive Ian Taylor described market conditions in 2013 as "very challenging" and "extremely competitive".

Some see a problem with the commodity trading firms' expanding reach. In 2013, Australia denied a $3 billion bid by ADM to purchase grain handler GrainCorp, stating that the deal would compromise national interests. U.S. regulatory authorities are scrutinising bottlenecks in aluminum warehouses owned by Glencore, to name a few.

"They are traders, they are manufacturers, they are suppliers," according to head of capital markets research at the Centre for European Policy, Diego Valiante. "The problem is, does this make a conflict?".

Nevertheless, many say opportunities for development are easyto see. Across Kenya the familiar yellow and red Royal Dutch Shell brand hangs above 123 service stations, a dependable source of gasoline for the nation's expanding demographic of middle-class vehicle owners.

But as they retain the logo, Shell has sold down its involvement with the business to a partnership in which Vitol, the energy trader better known for cutting behind-the-scenes contracts in remote and war-torn areas, holds a 40 percent share. One consumer said he would not have recognized who had been operating the facilities if a reporter hadn't told him.

"I normally make a bee-line for the Shell station," stated Jeremy Wyatt, a 43-year-old sustainable business-development manager based in Nairobi. "The staff hasn't altered, the service hasn't altered".