Markets: Ruralco challenges GrainCorp

Ruralco's grains marketing joint venture in grains marketing with the US co-op CHS will take the fight to Australia's biggest wheat buyer.

Whatever you can do I can do better. So says Ruralco, the Australian company with 40 business ranging from wool, livestock, grain and property. It has announced a joint venture with CHS Inc, a US agribusiness specialising in energy, grains and food.

CHS rival Archer Daniels Midland has offered to pay $3 billion for GrainCorp, Australia’s biggest wheat buyer. ADM has won approval from the body that oversees competition in Australia but has yet to win approval from the Foreign Investment Review Board.

Liberal senator Bill Heffernan, who is one of a number of prominent opposition politicians leading the charge against the ADM takeover of GrainCorp, said an unnamed wheat buyer had contacted him. The buyer told Heffernan he was worried ADM’s takeover of GrainCorp could lead to potential intimidation in the Australian wheat market.

Ruralco is not waiting around to see if the ADM acquisition succeeds. In an ASX statement today it said CHS and Ruralco will each have a 50 per cent stake in Agfarm, a grain marketing business. No financial details were disclosed.

“The formation of a joint venture with CHS will be a key partnership with Ruralco,” said Ruralco managing director John Maher in a statement. “Consistent with our strategy of partnering with quality businesses and people, this represents an outstanding opportunity to work alongside a leading global agribusiness.”

Maher did not returns calls to Markets Spectator asking for additional comment.

CHS is a US farmer-owned cooperative that annually sells about 50 million tonnes of grains and oilseeds.

“With two well funded owners Agfarm will continue to have access to capital to growth,” Maher said. “Customers will also benefit from CHS’ innovative solutions for input financing along with their international marketing expertise (and) global grain market intelligence.”

At 1057 AEST, Ruralco shares were down 12 cents, or 3.6 per cent, to $3.20. GrainCorp shares were up 3 cents, or 0.2 per cent, to $12.33.

In the last 12 months Ruralco’s stock has fallen 8.3 per cent. GrainCorp’s shares have risen 33 per cent.

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