US grain giants ADM and Cargill enter deal to swap facilities
16 Jul 2019 --- US grain merchants ADM and Cargill have reached an agreement to exchange ownership of certain grain facilities in Indiana and Illinois. ADM will sell to Cargill its Illinois grain elevators located in Beardstown, Naples and Keithsburg, and Cargill will sell to ADM its Indiana grain elevators in Mount Vernon and Evansville. Financial terms of the transaction have not been disclosed by the companies.
“Cargill continually evaluates our assets to ensure its sites are operating efficiently and fit our strategic growth plan. After an in-depth evaluation of our grain assets in this region, we concluded that the transaction will enable us to increase efficiency and better execute our growth strategy,” an ADM spokesperson tells FoodIngredientsFirst.
Amid US-China trade war tensions, Cargill reported a 41 percent dive in fiscal fourth-quarter profit, a concern further exacerbated by springtime flooding across the US Corn Belt, which slowed grain marketing and transportation activities.
ADM and Cargill have entered a deal to exchange grain elevators in Indiana and Illinois.The adverse trading climate was noted by the company as having overridden global supply-and-demand fundamentals and disrupted trade flows, especially in corn and oilseeds. Adjusted operating profit in the fiscal fourth quarter fell to US$476 million, from US$809 million in the previous year.
Elsewhere, Cargill noted softening profitability in biodiesel contributed to lower results in Europe. Additionally, earnings in South America were held back by a crop shortfall in Paraguay and a difficult crush environment in Argentina.
“Throughout the year, we faced a very challenging global business environment that slowed earnings. Still, we improved performance in several food and financial businesses and significantly reduced costs companywide,” says Dave MacLennan, Cargill’s Chairman and CEO.
ADM will be releasing its second quarter financial results on August 1.
“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 elevators in Indiana are a great fit for our origination network, and will allow us to better serve farmer and customer needs in the region,” concludes the ADM spokesperson.
By Benjamin Ferrer
