Louis Dreyfus to buy Chinese oilseed-crusher in deal worth up to $111m

Global food trader Louis Dreyfus is to buy a Chinese oil-crushing facility from Singapore-based palm oil producer Golden Agri Resources in a deal that could be worth $111 million as the Dutch-based agribusiness expands its presence in China.

According to a regulatory filing from Golden Agri Resources, the company has agreed to sell to a Louis Dreyfus subsidiary its stake in Sinarmas Natural Resources – a Chinese firm that owns oilseed crushing and vegetable oil refining operations in Tianjin, China.

The deal is subject to government approval and is a result of Golden Agri focussing on its core assets and operations, which involve palm oil cultivation and refining, the filing said.

Louis Dreyfus was unavailable for comment.

The final price is subject to adjustment, according to the filing.

Louis Dreyfus is one of the world’s so-called ABCD companies comprised of Archer Daniel Midland, Bunge and Cargill that have dominated the world’s trade in food, but are now facing declining margins due to record crops of wheat, soy and corn and rising competition from Chinese state-owned trading house COFCO.

The company’s purchase of oilseed crushing facilities in China is set against the backdrop of rising demand for soybeans in China.

Primarily used for animal feed, China is expected to import up to 100 million mt of soybeans – two-thirds of global seaborne trade - to meet rising demand for meat from its newly wealthy middle class.

The vast majority of soybeans are sourced from Brazil and the US, where Dreyfus buys soybeans from farmers to load on to vessels for export.

In particular, Dreyfus has a significant presence at the port of Paranagua in Brazil where local brokers estimate it purchases two-thirds of beans sold at the port for export.