The wholly-owned subsidiary of Archer Daniels Midland Company‘s (ADM) ADM Agri-Industries announced that it is going to double its canola seed receiving capabilities and storage capacity at the company’s Lloydminster, Alberta, processing facility, in an effort to meet the growing demand for canola oil seeds and enhance its market share. The oilseeds processing facility in Lloydminster crushes canola oil seeds and exports primarily to Asian countries for food applications and to Europe for use as a biodiesel feedstock.
Under this project, the company has planned to construct five new storage bins and a receiving system, which will facilitate farmers in reducing unloading time significantly. The expansion project will start from this spring season subject to some pending permit approvals. The project is expected to finish in the fourth quarter of this year.
In the past two years, Archer Daniels‘ major competitors such as Bunge Ltd. (BG), Richardson International Ltd. and privately held Cargill Inc. have made significant expansions in their Alberta-based plants. Canola oil seed is the second largest crop after spring wheat in Canada. Currently, Canada’s crushing capacity is approximately 8.2 million tonnes and is expected to crush a more than 6.0 million tonnes in 2010-11.
In another story, the company has announced that it has concluded an agreement with Baltic Grain Terminal, to construct a new grain warehouse with a capacity of 30,000 metric tones in the port of Gdynia, Poland, on the Baltic coast. Baltic Grain Terminal is a result of a joint venture between Archer Daniels and Baltic Logistic Holdings. This facility will help Archer in expanding its business in Poland as it is one of the company’s main origination regions for grains and oil seeds.
The project will require a surface area of 7,520 square meters and will be divided into four separate fields to provide accommodation for four different products at any time. The project is expected to be completed by the end of 2012. With the completion of this project, BTZ terminal will have a total storage capacity of around 90,000 metric tones after the completion of the new warehouse facility, and will become the largest grain storage capacity of any terminal in Poland.
The new storage capacity will be equipped with advanced loading and unloading systems and will fulfill all the requirements of the International Organization for Standardization (ISO), and will also follow the Good Manufacturing Practice (GMP) standards for food chain operations. These systems will help in increasing import throughput at the Indian Quay by reducing the service time of ships.
Archer Daniels, which competes with Corn Products International Inc. (CPO), currently, holds a Zacks #3 Rank, implying a short-term ‘Hold’ rating on the stock. Besides, the company retains a long-term ‘Neutral’ recommendation on the stock.
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