October 18, 2006

Cargill buys south China soy plant

US-based Cargill Inc has bought a soy plant in China's southern Guangdong province in a bid to acquire 15 percent share of the country's oilseed market.

According to an industry source, Cargill signed a contract to buy privately owned Yangjiang Fengyuan and hoped to resume operation early next year. The latter shut down in the middle of last year after running out of cash.

Saddled with huge over-capacity, China's soy crushing industry had been going through a painful restructuring process since a crisis two years ago when several firms defaulted on payments of high-priced soy cargoes arriving from South America.

Also, Noble Group, Asia's largest commodities trader, said it was paying about US$18 million to buy two soy plants in China, trebling its daily crushing capacity to 7,800 tonnes in the country, the world's top soy importer.

In June, Cargill launched a 5,000-tonne-per-day crushing plant--the country's single largest in Nantong in the eastern coastal province of Jiangsu.

It was not however clear if Cargill had already purchased Nantong Baogang Oils Co. Ltd, a 1,600-tonne-per-day plant, which it had leased and said it would like to acquire.

Yangjiang Fengyuan would add to Cargill's other facilities, including two in the southern province of Guangdong. Many other international traders with facilities in China, including Archer Daniels Midland Co. (ADM) and its partner Toepfer AG that command the largest share in the market. Other major market players are the Wilmar Group and state-owned trader COFCO.