December 5, 2005

Cargill buys soybean crusher in China's Guangdong province

US agribusiness giant Cargill Inc. has bought a soybean crusher in Dongguan, Guangdong province, China, for an undisclosed sum, the company said.

The Dongguan plant was owned by Dalian Huanong Group (DHG) and could process 2,000 tonnes of soy a day into soymeal and soyoil.

Cargill would also lease a plant owned by Nantong Baogang Oils Co. Ltd., with a daily capacity of 3,000 tonnes, official reports said. The Nantong plant in eastern China's Jiangsu province had earlier closed down because of the negative impact of China's bird flu outbreaks on feed demand. Production at the plant is expected to resume in early 2006, according to industry reports.

An industry analyst said the moves came as foreign firms sought to expand market share, and acquire private firms that were suffering heavy losses in light of structural overcapacity and the negative effects of bird flu.

Cargill already operates a soybean crushing plant in Dongguan, with a daily capacity of over 3,000 tonnes. The plant is next to the newly acquired DHG plant.

Cargill is also reportedly building a soybean crusher with a daily capacity of 5,000 tonnes in Jiangsu. The plant is expected to start production early next year.

China's soybean industry has been hurt by the fall in poultry feed demand, due to the recent bird flu outbreaks. Many domestic soybean crushers have cut back operations or even closed down.                           

Meanwhile, DHG has sold 30 percent of its stake in the soybean crusher in  Zhanjiang, Guangdong. The plant had a daily processing capacity of 4,000 tonnes.