"I see Cargill being the controller of all delivery points for Chicago and Kansas City (futures markets). Generally speaking they would control the delivery points, and that means controlling the spreads," said one Chicago Board of Trade (CBOT) floor trader who, like other grain traders approached for comment, asked for anonymity.

Cash grain export traders were also concerned.

"Continental is an extremely large player on the Illinois River," said a senior soybean export trader. "Continental, Consolidated Grain and Barge, and ADM (Archer Daniels Midland Co) are the biggest Illinois river players.

"Cargill had seven facilities on the Illinois river as well. Clearly, it gives the market fewer and fewer participants on the delivery side," the trader said.

Under the dealannounced on Tuesday, Cargill is to buy the global grain handling business of Continental in a deal expected to close in the first quarter of 1999, subject to regulatory approval. The deal combines the top two exporters.

Cargill will assume ownership of 65 grain elevators in the United States, including six large export terminals -- Tacoma, Washington; Stockton, California; Chicago, Illinois; Milwaukee, Wisconsin; Westwego, Louisiana; and Beaumont, Texas.

Also included are 32 country elevators and 27 river or barge-loading elevators, including several within the CBOT's new system of Illinois River deliveries against corn and soybean futures, approved by the Commodity Futures Trading Commission in May.

"I think it can affect basis," the soybean trader said. "On the Illinois river, I'M Sure there are probably some towns that have Cargill and Continental.

"There will be a lot of towns across the Midwest that went from three or four bids to two or three bids, and I don'T think that for a producer of grainand for a consumer of grain it is a good thing," the trader said.

Dale Durchholz, an analyst with consultant AgriVisor Services, was less alarmed at the prospect of the Cargill deal, however.

"It just means that they're going to be the ones that are going to make the money out of the storage in the delivery locations. I don't know that I'd Read a lot more than that into it, because anybody's got the ability to own that grain in a deliverable location," Durchholz said.

"You can go in there yourself today and buy 5,000 bushels of corn and wait for somebody to deliver it to you, and you own it, in Cargill's warehouse. You're going to pay the going rate for storage, but the rate for storage for deliverable grain is not set by Cargill, it's set by the Board of Trade," he said.

"It's not who controls the delivery points. The spread is controlled by who controls the grain. Maybe it's Cargill, but Cargill may give it up," he added.

CBOT futures traders also pointed to a possible reduction in grain futurestrading volumes with Continental's exit from the export market, where Continental sold futures to hedge purchases of millions of bushels of corn, wheat, soybeans and other grains each year.

But all agreed that the deal marked a consolidation of marketing power as much as financial assets.

"Conti exports 350 to 420 million bushels of grain a year at the Gulf, and now that is going to get loaded into Cargill's stack. They already export 400 million bushels of grain at the Gulf. So you are going to have one player at the Gulf now that is going to account for 40 per cent of the exports," the soybean trader said.