Olam International, the Singapore-based commodities trader, said merging with Louis Dreyfus Commodities is its preferred option as talks for a tie-up with the world’s largest rice and cotton trader continue.

“That would probably be the ideal outcome, but in this process we will see how else we can collaborate,” Olam Chief Executive Officer Sunny Verghese said today in an interview at a conference in Sydney. “A merger would probably be a desired outcome.”

The discussions are preliminary and the outcome is uncertain, Verghese said. The two companies have been talking “for a while,” he said. He declined to say which company started the talks.

Olam said Sept. 24 it was in talks with closely held Louis Dreyfus over “possible business collaboration, which may take the form of, among others, a merger.” Agricultural companies worldwide are seeking acquisitions to benefit from surging demand for food led by China and India.

“It’s a good combination in terms of geography,” Verghese said, referring to a possible merger with Louis Dreyfus. “It’s very complementary in terms of businesses. These talks could last six months, twelve months. It’s difficult to predict. In these kinds of talks, it’s difficult to say where you are in the process.”