October 25, 2012


US CHS seeks expansion to meet rising Asian demand



In order to meet rising demand from Asia and tap increasing grain output in South America and Eastern Europe, US farm co-operative CHS Inc. is seeking to expand its grain buying, storing and shipping assets.


According to CHS President and CEO Carl Casale on Tuesday (Oct.23), the Inver Grove Heights, Minnesota-based company has expanded its export facilities in the US Pacific Northwest and Gulf Coast, South America and eastern Europe over the past two years, tapping several producing regions to help blunt the impact of weather-related crop shortfalls.


It has also opened offices in western Canada, Asia and Latin America amid intense competition between grains traders to feed fast-developing countries seeking food security. The investments by CHS and other deals are part of a broader wave of consolidation in the global grains trade.


Last week, US agribusiness Archer Daniels Midland (ADM) bid US$2.8 billion for Australian grain handler GrainCorp, which the company was reviewing. GrainCorp was also believed to be weighing bids from other agribusiness heavyweights including Bunge, Cargill CARG.UL and Louis Dreyfus LOUDR.UL, which along with ADM comprise the dominant group known as the ABCDs of the global grain trade.

CHS has not been mentioned as a bidder in for GrainCorp.


CHS supplies energy, crop nutrients, grain, livestock feed, food and food ingredients, as well as business services including insurance, financial and risk-management services. It owns a grain export terminal at the Louisiana Gulf Coast and has a shipping agreement with an export facility in Houston, Texas. It also owns a 50-% stake in a Kalama, Washington, export terminal via a joint venture with Cargill, offering more geographically direct access to the lucrative Asian market.


It has also recently added export facilities in the Black Sea region and trading offices in Canada, South Korea, Singapore and Uruguay. While the recent acquisitions and investments in existing businesses do not put CHS in the realm of the ABCDs, the company's expanding global footprint allows it to remain competitive, Casale said.