“This direct import of durum wheat has enriched the structure of China’s imported wheat varieties, facilitated the extension of COFCO’s products upstream and further improved COFCO’s… full industry chain model,” it said in a statement.

COFCO said the durum wheat was purchased by COFCO International and will be transferred to COFCO Haijia (Xiamen) Flour Co. Ltd. for processing.

China has already imported almost two million metric tonnes of durum wheat from Canada this year, according to Chinese customs data.

That does not match Canadian government data, however, which shows China bought no Canadian durum during the past year through September, the most recent month for which data is available.

Chinese purchases of other types of Canadian wheat were larger year-on-year during the 2022-23 crop marketing year, which ended July 31, the Canadian data showed.

The discrepancy is likely due to China’s customs agency classifying wheat differently, said Chuck Penner, a Canadian analyst at LeftField Commodity Research.

READ MORE: High pasta prices set to boil over as Canada’s wheat withers

He said Canada does not have enough durum to sell such a large volume during the year to Chinese buyers and still supply regular importers in the U.S., north Africa and Europe.

Canada accounts for around half of the global trade of durum, a type of hard wheat used to make pasta.

China has imported record volumes of wheat this year, with rain damage to its crop and worries over dry weather in exporting nations fuelling Beijing’s appetite to buy while prices are low.

The world’s largest wheat consumer has imported 10.83 million tonnes of wheat in the first 10 months of this year, a 37.7 per cent surge from a year ago, customs data showed.

— Reporting for Reuters by Mei Mei Chu; additional reporting by Rod Nickel in Winnipeg.

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The China Enterprise United Grain Reserve Co. Ltd. was established in September, according to the COFCO statement on its public WeChat account, and is part of the state’s efforts to improve the efficiency of its grain reserves and better ensure food security.

China buys soybeans and grain from global markets to stock its state reserves, which it says are critical to ensuring food supplies for the world’s biggest population.

— Reporting for Reuters by Dominique Patton.

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The six companies — ADM, Bunge, Cargill, Louis Dreyfus, Cofco and Glencore Agriculture — announced Wednesday the project will be named Covantis, and have hired former ADM executive Stefano Rettore as the project’s leader until a CEO is in place.

“Covantis offers a path to improve agricultural trade, unlocking significant value for all players across the supply chain,” Rettore said in a release. “By working collaboratively with the industry, we have an opportunity to build a more effective, more efficient digital future for global trade.”

Rettore worked in international grain trading until May this year as president of ADM’s origination business. Before joining ADM in 2017 as its chief risk officer, he was president of the international trading arm of U.S. ag co-operative CHS.

ADM, Bunge, Cargill and Dreyfus — the four ‘ABCD’ companies known to dominate the world’s grain trade — first announced their partnership in October last year to develop the proposed platform.

China’s Cofco International, which has operated a Canadian grain trading office since late 2016, joined the partnership last December, followed by Glencore Agriculture — owner of Canadian grain firm Viterra — in September this year.

Project developers said they visited Brazil in October and met with various stakeholders in soybean trade and traffic bound for China from the Brazilian port of Santos, which they said will be “the first trade lane in our future platform.”

The Covantis platform isn’t expected to launch until sometime next year, organizers said. The project itself, as well as its governance and executive appointments, are subject to regulatory approvals.

The partners said last year their project’s initial focus will be to “automate grain and oilseed post-trade execution processes.”

On its new website, Covantis is billed as an evolution from paper documents to digital processes, supporting a contract’s enforceability by allowing a user to see the full history of any changes made or requested.

Covantis’ operators say their proposed system could automate an estimated 60 per cent of the tasks involved in executing a transaction, and speed up the documentation processes which are now handled on paper or via emails by seven to 10 days on average.

Today, they said, over 275 million emails are sent each year to process the estimated 11,000 bulk shipments of grains and oilseeds moved by sea.

“End-to-end visibility at all stages of vessel execution would prevent slow-downs,” Covantis’ operators said. “Every process, from loading to transit to discharge, will be trackable in real-time with Covantis.”

Furthermore, they said, the new system would cut down on the likelihood of error by automating repetitive data, allowing a user to import the correct information once, then “replicate it in a single click.”

In all, they said, the platform would help reduce re-keying of entries by 90 per cent, while boosting transaction speed by 70 per cent. — Glacier FarmMedia Network

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Agricultural commodities traders have been grappling with lower profits from sourcing and shipping commodities such as grain and oilseeds, prompting cutbacks in trading teams, investments in food processing activities and acquisition speculation.

Bloomberg reported Friday that Dreyfus (LDC) was in talks with investors about selling equity stakes in the company, potentially opening up the family-controlled business to outside capital for the first time in its 168-year history.

“(CEO Ian McIntosh) confirmed that all options remain open, including the possibility of opening LDC’s capital to regional players who could help drive our development,” LDC spokeswoman Karen Saddler said in an emailed statement to Reuters.

“There are no specific plans, but all possibilities are open,” she added.

One source familiar with the matter said separately that the group was looking for a minority partner to get access to cash and a network.

Louis Dreyfus said last month that it planned to invest in the stock market flotation of Asian poultry and food company Leong Hup International, as it looks to increase its presence in food processing and cited regional partnerships as a way to expand.

The company also bought a stake in Luckin Coffee as part of a U.S. initial public offering planned by the Chinese chain last month.

Bloomberg said LDC had approached Chinese partners, such as COFCO, and its global trading arm COFCO International, as well as some of Japan’s biggest trading houses.

LDC said McIntosh meets a broad variety of stakeholders, including peers such as COFCO, which was not to say that he is looking to find a partner or discuss this with all those he meets.

— Reporting for Reuters by Gus Trompiz in Paris and Rama Venkat in Bangalore; additional reporting by Oliver Hirt in Zurich; writing by Sybille de La Hamaide.

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The extended Chinese market closure for the Lunar New Year also kept prices in check. They touched a seven-month high in the previous session.

Corn and wheat followed soybeans higher as grain markets waited for the U.S. Department of Agriculture (USDA) to clear a backlog of crop reports delayed by a partial government shutdown.

USDA on Monday confirmed private sales of 612,000 tonnes of U.S. soybeans to China. The volume was lighter than expected after traders said on Friday that the world’s top soybean buyer had booked at least one million tonnes.

“The export sales to China announced this morning were a bit disappointing compared with expectations. But here’s a hope for continued sales to China and there are concerns about South American weather,” said Rich Nelson, chief strategist with Allendale Inc.

The Chinese state agricultural conglomerate COFCO Group said on Saturday that it recently purchased a batch of soybeans amounting to “millions of tonnes” from the United States.

The soybean purchases capped a round of high-level negotiations in Washington last week, held as part of a truce period agreed upon by the United States and China to try to resolve their tariff standoff.

Chicago Board of Trade March soybeans were up 3/4 cent at $9.18-1/2 a bushel, March corn was up one cent at $3.79-1/4 a bushel and CBOT March wheat was up 1-1/2 cents at $5.25-3/4 a bushel (all figures US$).

Crop forecasters have been cutting their Brazilian soybean harvest outlook for weeks as hot, dry weather in parts of the country hurt yield prospects. Still, the crop is expected to be among the largest ever produced by Brazil, the world’s top soy exporter.

Brokerage INTL FCStone lowered its estimate of Brazil’s soybean crop on Friday to 112.2 million tonnes, down four million tonnes from last month.

Traders are awaiting Friday’s supply and demand forecasts from USDA for any further revisions to U.S. soybean supply in view of the trade dispute.

— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago; additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore.

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Favourable crop weather in the U.S. Midwest weighed on soybeans and corn, which also hit contract lows, on expectations for bumper harvests this season.

Wheat slumped for a third straight day, following corn and soy lower and as stiff global competition dented demand for U.S. shipments.

Worries about rising trade tensions with China hung over markets in general after Washington detailed products to be covered by a 10 per cent tariff on an extra $200 billion worth of Chinese imports (all figures US$). China has vowed to strike back.

The hardening standoff has put particular pressure on soybeans, the most valuable U.S. agricultural export to China, which bought more than $12 billion of U.S. soybeans last year.

The president of state grains trader COFCO was quoted on Wednesday as saying China could reduce reliance on U.S. soybeans by increasing imports of soybeans from other countries, or other oilseeds, or meat directly.

“In the short run, China’s probably not going to be able to take too much of their business away from the U.S., and what they do likely will get displaced. But in the long run, this is giving them more incentive to develop other channels,” said Ted Seifried, analyst with Zaner Ag Hedge.

Chicago Board of Trade August soybean futures fell 22-3/4 cents, or 2.7 per cent, to $8.33 a bushel, after notching a contract low of $8.31-3/4. New-crop November soybeans fell 23-1/4 cents to $8.48-1/4 a bushel, the lowest closing price for a most-active contract since March 2009.

CBOT September corn touched a contract low of $3.39-3/4 a bushel and ended down 7-3/4 cents, or 2.2 per cent, at $3.40 a bushel.

Forecasts for rain and cooler Midwest temperatures in the week ahead boosted prospects for a bumper corn harvest and bolstered expectations that the U.S. Department of Agriculture (USDA) will raise its production forecast in a monthly crop report on Thursday.

CBOT September wheat futures fell 20-1/4 cents, or 4.1 per cent, to $4.71-3/4 a bushel.

Generally favourable growing conditions for U.S. spring wheat anchored wheat prices, along with easing concern about global supplies.

France’s farm office FranceAgriMer said on Tuesday the country had bigger wheat stocks than expected.

— Karl Plume reports on agriculture and commodities for Reuters from Chicago; additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore.

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China pledged at the weekend to increase imports from its top trading partner to avert a trade war that could damage the global economy. Energy and commodities were high on Washington’s list of products for sale.

The U.S. is also seeking better access for imports of genetically modified crops into China under the deal.

As the two sides stepped back from a full-blown trade war, Washington neared a deal on Tuesday to lift its ban on U.S. firms supplying Chinese telecoms gear maker ZTE Corp., and Beijing announced tariff cuts on car imports.

But U.S. President Donald Trump indicated on Wednesday that negotiations were still short of his objectives when he said any deal would need a “different structure.”

China is the world’s top importer of both oil and soy, and already buys significant volumes of both from the U.S. It is unclear how much more Chinese importers will buy from the U.S. than they would have otherwise, but any additional shipments would contribute to cutting the trade surplus, as demanded by Trump.

Asia’s largest oil refiner, China’s Sinopec will boost crude imports from the U.S. to an all-time high in June as part of Chinese efforts to cut the surplus, two sources with knowledge of the matter said on Wednesday.

Sinopec’s trading arm Unipec has bought 16 million barrels, or about 533,000 barrels per day, of U.S. crude to load in June, they said, the largest volume ever to be lifted in a month by the company and worth about $1.1 billion (all figures US$).

“The government has encouraged us to lift more U.S. crude,” one of the sources said.

China has been one of the top buyers of U.S. crude exports since Washington lifted a 40-year ban on shipments in late 2015.

Since then, U.S. crude exports have risen rapidly as output from shale fields hits record highs. Exports are straining U.S. pipeline and port capacity, and may be reaching a limit until capacity expansion underway are completed, one of the sources said.

“We want to buy more but they might not be able to export more,” the source said.

Other Chinese refiners are looking to reconfigure their plants so they could buy and process U.S. oil, one trade source said.

Soybean interest

In agriculture, China’s state grain stockpiler Sinograin returned this week to the U.S. soybean market for the first time since early April, two sources said.

Soybeans are America’s top agricultural export to China, worth $12 billion last year, and the absence of Chinese buyers from the market had left U.S. farmers wondering if their biggest buyer was going to want their next harvest.

Sinograin enquired about prices for U.S. soybeans this week, traders said, which market participants interpreted as a sign that government curbs on buying American goods had been lifted

“Sinograin is in the market today asking U.S. suppliers to make offers for shipment of old-crop as well as new-crop beans for shipment August onwards,” said a source who works at a private soybean crushing company in China.

“It is a clear message to even private companies that it is OK now to import U.S. beans.”

Two other sources briefed on the matter said Chinese state grain trader Cofco would be permitted to buy U.S. soybeans again, ending restrictions imposed by Beijing as trade tensions rose. The sources declined to be named as they are not authorized to speak to the media.

Sinograin, Cofco and the ministry of agriculture and rural affairs did not respond to requests for comment.

The ministry of commerce had not told state companies to increase purchases of U.S. soybeans, a ministry spokeswoman said.

U.S. Gulf export prices for the new soybean crop rose on Tuesday, which a U.S.-based trader said may indicate a revival in demand from China. Exporters were lining up supplies for October to December shipment, the trader said.

Improving trade relations appeared to be rekindling interest from China for other grains, traders said. That will come as a big relief to U.S. farmers, who saw orders cancelled and business dry up as Washington and Beijing threatened each other with trade tariffs.

— Reporting for Reuters by Dominique Patton and Hallie Gu in Bejing and Florence Tan and Naveen Thukral in Singapore; additional reporting by Karl Plume and Tom Polansek in Chicago; writing by Josephine Mason and Simon Webb.

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Cofco opened its Canadian trading office in Winnipeg in late 2016. It buys canola from export companies at ports, and has no plans to build crushing plants or country elevators in Canada that would allow it to buy directly from farmers, said Felix Mueller, who is based in Geneva for Cofco.

“So far things are working very well,” Mueller said on the sidelines of the Grain World conference in Winnipeg. “I can tell you there is no major investment in the pipeline at the moment. It’s more about building our corporation stronger with key suppliers and feed our demand.”

Cofco’s 2.5 million tonnes would represent some 14 per cent of all the canola Canada produced last year.

About two million tonnes of that volume will be consumed in China after being processed into canola meal and oil, while the balance may be traded to other countries, including Pakistan, Mueller said.

China’s demand for canola is limited, however, by the country’s appetite for protein, which favours oilseed rival soybeans, he said.

In total, China is likely to import four million to 4.4 million tonnes of canola from Canada in the current 2017-18 crop marketing year, Mueller said.

In the previous year, Canada shipped four million tonnes of canola seed to China, according to Canadian government data.

— Rod Nickel is a Reuters correspondent covering the agriculture and mining sectors from Winnipeg.

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The partnership is the latest expansion move by CIL after it invested US$3 billion to buy Noble Group’s agribusiness and a large stake in Dutch grain trader Nidera in deals that bolstered its position in the international grain market.

As part of the deal, the companies said they will jointly own and operate a truck, rail and barge terminal in Cahokia, Illinois, on the Mississippi River, the main pipeline that supplies exporters along the U.S. Gulf Coast with corn and soybeans.

Growmark, which provides agronomy services, grain marketing and risk management services and retails crop inputs to farmers in over 40 states and in Ontario, will also assist in sourcing grain at Cofco’s St. Louis office as part of the partnership, the companies said in a statement.

The U.S. is the world’s largest corn exporter and No. 2 soybean exporter. China, the top soybean importer, is among the largest markets for U.S. agricultural products.

The companies did not disclose the terms of the deal.

“CIL aims to be and be recognized as a world-class global agribusiness,” CIL CEO Johnny Chi said in the statement.

Cofco said last year that it was seeking potential partnerships or acquisitions in North America, but Reuters has since reported that the company has struggled to integrate its large acquisitions and may not participate in a large-scale industry consolidation.

Large grain traders have been struggling with a global grain glut that has depressed crop prices and squeezed margins for the companies that aim to make money buying, selling, storing and shipping grain around the world.

Market leaders Archer Daniels Midland, Bunge, Cargill and Louis Dreyfus, known as the ABCD quartet of global grain giants, have recently faced increased competition from smaller traders such as Cofco.

Cofco doesn’t have its own grain sourcing network in Canada but announced plans last summer to set up a grain trading office in Winnipeg.

Growmark’s grain marketing business in Canada, meanwhile, includes a stake in Ontario country elevator operator Great Lakes Grain.

Growmark in recent years has solidified its business in the Ontario market, buying full ownership of Ontario farm fuel retailer UPI Energy last fall and full control of the FS Partners ag retail chain in 2009.

— Reporting for Reuters by Karl Plume in Chicago. Includes files from AGCanada.com Network staff.

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Cofco, which said in June it plans to open a Canadian grain trading office in Winnipeg, recently announced it had loaded a container ship at the northeastern port of Dalian on Nov. 17 with “small-packaged” wheat flour bound for Vancouver.

The products, packaged under Cofco’s Fortune and Xiangxue brands, include Fortune Jindian dumpling flour, multi-purpose flour, Xiangxue dumpling flour and steamed bun flour, the company said in a release.

The order “mainly caters to the needs of (the) overseas market for China’s quality special purpose flours, enabling local Chinese compatriots to taste the flavour of authentic hometown dishes during the Spring Festival.”

In 2017, Spring Festival, also known as Chinese New Year, falls on Jan. 28.

Leading up to this shipment, Cofco said, its wheat processing unit “has leveraged the advantages of (a) ‘fully-integrated value chain’ by purchasing unprocessed food grains of good quality and applying international leading milling technology and rigorous quality control.”

On its website, Cofco — short for China National Cereals, Oils and Foodstuffs Corp. — notes it operates 13 flour mills in several of China’s “best wheat-growing” areas.

Cofco, which in 2015 bought full control of Noble Group’s agribusiness and this year bought full control of Dutch grain trader Nidera, said its staple grain team will continue to “actively engage” in overseas marketing. — AGCanada.com Network

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