CHICAGO (Reuters) - Archer Daniels Midland Co's ADM.N proposed takeover of Bunge Ltd BG.N could signal a change in the company's strategy on oilseeds, giving the top U.S. grain merchant a much bigger capacity to crush soy just months after ADM's chief executive said the firm would cut spending on the sector.

The world's largest corn mill of global grain company Archer Daniels Midland is pictured in Decatur, Illinois March 16, 2015. REUTERS/Karl Plume

The potential strategic change comes as the world’s biggest agricultural merchants search for new ways to offset four years of bumper harvests that are hurting their ability to make money through the traditional channels of buying, selling and shipping crops.

Consolidation is seen as one remedy, and ADM has proposed a takeover of Bunge, one of the world’s top oilseed processors, a source said on Friday.

ADM and Bunge have declined to comment on the takeover approach.

Both companies crush soybeans to make vegetable oil and livestock feed for customers around the world, including meat producers.

Just three months ago, though, ADM chief Juan Luciano said the company would reduce capital spending on oilseed crushing and increase spending on higher-margin businesses, such as food ingredients, “in support of the growth portion of our strategic plan.”

The company placed its biggest bet on that strategy in 2014 when it acquired natural flavorings company Wild Flavors for about $3 billion.

“A merger would differ from the value-added push that ADM described as its strategy when it bought Wild Flavors,” Credit Suisse analyst Robert Moskow said. “That said, this represents a golden opportunity for ADM to grow its oilseeds division and improve its long-term competitiveness.”

Especially valuable to ADM could be the chance to expand oilseed operations in Brazil, the world’s biggest soy exporter, traders said. Bunge controls 27 percent of the oilseed crush market there, while ADM has 10 percent, according to data from Credit Suisse.

JP Morgan analyst Ann Duignan also said Bunge’s processing capacity outside of the United States would likely be considered “prize assets” for ADM.

ADM and Bunge shares rose 4.4 percent and 5.9 percent, respectively, on Monday.

Bunge had rebuffed an acquisition offer from Glencore Plc GLEN.L last year, but Heather Jones, analyst for Vertical Group, placed the odds of a Bunge takeover above 50 percent after ADM's approach.

She said a bigger bet by ADM on oilseeds could pay off as that market grows over time - presenting a simpler path to improved returns than a lengthy strategic overhaul.

“Arguably the most bullish longer-term theme in the agribusiness sector is global vegetable protein demand,” she said.