Miller Magazine Issue: 116 August 2019

30 NEWS MILLER / AUGUST 2019 US grain merchants ADM, Cargill agree to swap elevators Large U.S. grain merchants Cargill and Archer Daniels Midland have reached a deal to swap some of their grain elevators in the U.S. Midwest in a deal expected to close later this summer. The deal includes a sale by Cargill of its Mount Vernon and Evansville, Indiana, elevators on the Ohio River to ADM. In return, ADM will sell its Beards- town, Naples and Keithsburg, Illinois, elevators along the Illinois River to Cargill, representatives from both compa- nies said. ADM and Cargill did not release financial terms of the deal. Both companies, among the largest grain mer- chants in the world, said the swap would increase efficien- cies and fit both companies’ long-term strategies. ADM and Cargill have been cutting costs and restructur- ing operations in recent years as a global glut of grain has squeezed margins. A trade war between the United States and China has reduced U.S. agricultural exports to the world’s top soybean buyer and eroded profits for the glob- al commodities traders. “We regularly evaluate our port- folio to ensure that our businesses and assets best fit our strategy to maximize long-term returns. Cargill’s Mount Vernon and Evansville, Indiana, elevators are a great fit for our origination network,” ADM spokeswoman Jackie An- derson said in an emailed statement to Reuters. The facilities buy grain and soybeans and load river barg- es bound for the Gulf Coast, home to some of the nation’s largest bulk grain export terminals. The deals would effec- tively reduce the number of buyers competing for farmers’ crops in some areas. In Evansville, ADM already operates a barge-loading elevator less than a mile from the one it is buying from Cargill. The Keithsburg elevator Cargill is buying is less than 10 miles (16 km) from another facility it owns in New Boston, Illinois. “Because we believe the competition in this area remains very strong ... we don’t see any competition concerns,” said Cargill spokeswoman Vic- toria Bagley, adding that closing the transaction was “not contingent on any competition review.” Cargill reported a 41% drop in fiscal fourth-quarter profit, citing negative effects from the U.S.-China trade war and adverse spring weather in the United States. Cargill’s animal nutrition and protein segment posted a lower year-on-year profit for the third time in four quarters as poor weather disrupted U.S. Midwest cattle shipments and reduced demand for beef for outdoor grilling. Reduced hog feed demand in China, where a deadly hog disease called African swine fever has decimated the industry, further dampened results. ADM is due to report second-quarter results on Aug. 1. REUTERS Archer Daniels Midland and Cargill both confirm they have reached an agreement to exchange ownership of some grain elevator facilities in Indi- ana and Illinois. The swap would increase efficiencies and fit both compa- nies’ long-term strategies.