Jen Skerritt
VITERRA, the Canadian grain handler owned by Glencore, is exploring possible ventures or acquisitions in the US, the top agriculture producer.
“From an acquisition standpoint, obviously a focus for us is the US,” Kyle Jeworski, Viterra’s chief executive, said on Tuesday at an industry conference in Saskatoon, Saskatchewan. He did not provide further details.
After Glencore’s purchase of Saskatchewan-based Viterra in 2012, earnings before interest and taxes in the parent’s agricultural trading rose fourfold to $856 million (R10 billion) in 2014 from a year earlier.
Glencore, the biggest publicly listed commodity trader, might focus on grain ventures instead of expansion in metals, analysts including Michael Rawlinson at Barclays said last month.
Viterra was building new facilities and improving existing grain elevators to accommodate rising crop production, including spending more than C$100m (R962m) on a Vancouver port to meet rising demand from Asia, Jeworski said.
“I’m optimistic we’ll be able to maintain, if not grow, our sales position out of Canada,” he said.
Canada’s output of grains and oilseeds would rise 4.5 percent to 76.9 million tons in 2015, the nation’s agriculture agency said last month.
Viterra was “heavily dependent” on crop volumes, and while Canada’s 2014 production declined from record levels a year earlier, it was “still a very significant crop”, Jeworski said.
Bumper crops
Farmers in Canada collected the largest wheat and canola crops ever in 2013 and harvested the second-largest canola output in 2014, government data show.
“Do I think 2013 was an anomaly?” Jeworski said. “No, I don’t.”
The record harvest in 2013 spurred Canada’s government to order the country’s largest railways to ship a minimum amount of grain each week to alleviate the backlog on farms.
Viterra is spending on its facilities to ensure it is well-positioned to move this year’s grain “and future increased crops into export position”, Jeworski said.
“I’m absolutely confident we’re spending the money where we need to spend it, and that’s in our infrastructure.”
Shares of Glencore, which is based in Switzerland, have dropped 7.7 percent in the past 12 months.
Peter Grauer, the chairman of Bloomberg, the parent of Bloomberg News, is a senior independent non-executive director of Glencore. – Bloomberg