home Latest News ADM, Cargill reach deal to swap U.S. Midwest grain elevators – Reuters Africa

ADM, Cargill reach deal to swap U.S. Midwest grain elevators – Reuters Africa

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CHICAGO, July 11 (Reuters) – Large U.S. grain merchants Cargill Inc and Archer Daniels Midland Co 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, both companies said on Thursday.

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 Beardstown, Naples and Keithsburg, Illinois, elevators along the Illinois River to Cargill, representatives from both companies said.

ADM and Cargill did not release financial terms of the deal.

Both companies, among the largest grain merchants in the world, said the swap would increase efficiencies and fit both companies’ long-term strategies.

ADM and Cargill have been cutting costs and restructuring 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 global commodities traders.

“We regularly evaluate our portfolio 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 Anderson said in an emailed statement.

The facilities buy grain and soybeans and load river barges bound for the Gulf Coast, home to some of the nation’s largest bulk grain export terminals.

The deals would effectively 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 Victoria Bagley, adding that closing the transaction was “not contingent on any competition review.”

Cargill on Thursday 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. ADM is due to report second-quarter results on Aug. 1.

Reporting by Karl Plume in Chicago; Editing by Peter Cooney