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UPDATE 2-ADM has made takeover approach to Bunge -WSJ

(Adds industry comment, company background, other details)

Jan 19 (Reuters) - Agricultural processing and trading company Archer Daniels Midland Co has proposed a takeover of Bunge Ltd, the Wall Street Journal reported on Friday, a move that could set up a battle for Bunge with London-based rival Glencore Plc .

Bunge and other top grains traders - who make money by buying, selling, storing, shipping and trading crops - are struggling to adapt to a world of oversupply.

ADM said it does not comment on "rumors or speculation," while Bunge was not immediately available for comment.

Glencore last year sought a tie-up with grains trader Bunge in what was taken as the starting signal of a wave of consolidation and partnering in the industry.

Bunge rebuffed Glencore last year, and the two struck an agreement that temporarily prevents Glencore from making a hostile bid, according to news media reports.

The Journal quoted unnamed sources are saying that ADM had made the approach and that details were unclear.

The scale of a tie-up between ADM and Bunge would raise bigger regulatory concerns than if Glencore acquired Bunge, said a grain trading source. Big asset divestments would be necessary to clear regulators in areas such as combining oilseed crushing operations, the source said.

Thats like New York buying Chicago to me. You buy a whole basket of goodies and then start dismantling, the person said.

Large grain traders have struggled in recent years with the global oversupply and thin trading margins have squeezed their core commodity trading operations, including those of Bunge, ADM, Cargill Inc and Louis Dreyfus Co.

Shares of Bunge, which has a market cap of $9.79 billion, closed up 11 percent at $77.56 on Friday.

ADM has a market capitalization of $22.64 billion, while Bunge's market cap stands around $10 billion. (Reporting by John Benny in Bengaluru and Rod Nickel in Winnipeg; Editing by Maju Samuel and Matthew Lewis)