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Veteran Advisor

Hey Palouser the big get bigger

What do you think of this?  Looks like the big C is gonna rule the world pretty soon,

 

10:19 UK, 15th December 2010, by Agrimoney.com
Cargill beefs up in Australia with AWB grain deal

Cargill has vaulted up the league of crop handlers in Australia by purchasing AWB's commodity management business, in a deal termed a "significant milestone" for the industry.

The US agribusiness giant is to pay cash for the business, once Australia's monopoly wheat exporter, from Agrium, the acquisitive Canadian fertilizer and farm retail group in the process of digesting AWB.

The value of the deal will be decided when it is completed, an event expected in the first half of next year once regulatory approvals have been obtained.

However, as of September 30, the operations being disposed of would have been worth about Aus$870m ($860m), including some Aus$240m in debt that Cargill will assume.

'Dividends for growers' 

Mike Wilson, the Agrium chief executive, said that Cargill's purchase of the AWB business "will be a significant milestone in the evolution of Australia's grain industry".

"We believe it will provide dividends for Australian growers through improved market access, knowledge, relationships, and expertise in the world grain trade, and as a result will provide a stronger global marketing presence for Australian crops," he said.

Cargill has been a relatively small player in the Australian grain handling sector, employing only 1,900 of its 131,000 staff in the country, and this spread over sectors including cattle feedlots, oilseed processing and flour milling.

The deal also comes amid something a flurry of investment by Cargill, whose profits have been boosted by the rising and volatile crop markets.

The company also on Wednesday unveiled the purchase of a majority share in Indonesian sorbitol producer Sorini Agro Asia Corporindo for 2.72bn rupiah ($300m), and last week announced the capacity upgrade of its Gilman grain facility in Illinois, which will be able to receive 60,000 bushels of grain an hour, 25,000 bushels an hour more than at present.

Retail core

Cargill is the latest of a series of grain giants to target Australia since the deregulation of its grain export operations, following a breach by AWB of curbs on shipments to Iraq during the regime of Saddam Hussein.

Canada's Viterra bought ABB Grain, initially a barley business, last year, while Japan's Sumitomo Corporation has bought a stake in Emerald.

For Agrium, however, the prime objective of its $1.1bn AWB purchase was to snap up the group's retail business, Landmark, to extend its footprint of farm supply operations from North America.

The Cargill deal "is the best course of action for all stakeholders involved", Mr Wilson said.

Agrium will also retain commodity business worth some Aus$55m not being bought by Cargill.

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Senior Contributor

Re: Hey Palouser the big get bigger

This is classic Cargill investment strategy, and you can't fault them for that. The Australian scene for outsiders was limited with the AWB in place. They self distructed and left a vacuum when it was disbanded. I'm not familiar enough with the new structure of grain procurement and competition within Oz but it is changing by the day - and consolidating. It appears that at the moment exporters of wheat are cutting a fat hog based on the huge differential between producer port price and FOB price I see on the West Coast. Depending on events this may go on for some years. Is a $1-2/bu differential in favor of the exporters outlandish? Usually it's a dime or two and it is a volume business.

 

Cargill has been operating in Aus for some time in a limited way. Everyone is competing for a piece of the export pie there. Cargill takes a long term view and I don't see any problem with them getting a piece. Cargill is a cpmpetent company. The mistakes Cargill has made has been when they tell farmers what's good for them, as they have done in the farm policy debates - and have been wildly slanted, self serving and ideological in that respect. That really fed into the negative connotations of Cargill image (though I believe they have given that strategy up for now). And they always have plenty of people revolving in and out of government positions on ag policy so it's not like they aren't going to be heard. The other negative IMO are the questions regarding allegations they subverted the intent of the DOJ agreement in the PNW after they were approved to buy out Continental Grain.

 

 

 

 

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Veteran Advisor

Re: Hey Palouser the big get bigger

Palouser....what do you think of the split between CHS and Mitsui??

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Veteran Advisor

Re: Hey Palouser the big get bigger

Hey ray are you gettin in lots of corn? 

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Senior Contributor

Re: Hey Palouser the big get bigger

Ray, I honestly don't know anything about the partnership or why they split. Never was sure how they complimented each other other than an 'in' into the Japan Food Agency. Supposedly they still have other strategic partnerships.

 

The one project I do think is important is Bunge's return to the PNW exporting business in a partnership that is building a new terminal. It's obvious now that the current set up in the Portland district is obsolete in terms of the capacity needed to service China and the rest of the Pacific Rim, resulting in the selling of elevation capacity as well as the actual service of loading - capacity commanding a premium. And Portland needs more competition to the exporter club there. Although it sounds like the Bunge project, known as EGT Development, will only keep up, not create unneeded shipping capacity.

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Re: Hey Palouser the big get bigger

JR......had a slow day on Monday with 180 trucks, but that was OK as we had trouble getting two of our three corn dumps going.....doesn't help going from 45 to zero and getting some snow in places it shouldn't be....but we're back at it full throttle today and dumped about 450 trucks....we'll see if overnight weather does anything to us....

 

thanks for reporting the WHO poll info.....haven't been able to listen to much of the big show this week....was thinking of you last weekend when the wind was howling.... Mrs. J and I were dairy farmers for almost 25 years and these bad weather events bring back lots of memories.......today I check the herd by looking at our collection of Bonnie Mohr prints!

 

regards,

 

Ray J

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Veteran Advisor

Re: Hey Palouser the big get bigger

RJ did you see my pics over in cattle talk about the blizzard? 

SO what do you feed those Bonnie Mohr prints? LOL have a good one. JR

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Re: Hey Palouser the big get bigger

wow! 450 trucks in how long? I have a brother that lives in lisbon and works at rockwell in CR.When I visit,  I would love to drive near the dumps and see where you stage all those trucks. Keep grindin'.

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Veteran Advisor

Re: Hey Palouser the big get bigger

This is into Eddyville......we were open from 6am to 5:30 pm yesterday....

 

can dump about 45,000 bushels per hour on a total of three pits...

 

unfortunately, we are seeing that many large elevators are lugging damaged corn ahead.....this slows down our grading process when we have to "pick" through lots of loads.....we rejected 28 loads yesterday for being over our 10% damage limit.....I've been doing this 20 years and never had that many rejects in one day in the month of December....in fact, most years when you get to December rejects drop close to zero....oh well, we'll keep "digesting" the 2009 crop for months to come!

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Senior Contributor

Re: Hey Palouser the big get bigger

Ray that is very interesting that there is still that much damaged grain out there...... From what you hear is this just in your draw area or is it bigger?...... p-oed

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