CHSInc’s journey along the Danube H2O Highway-Connecting Farmers to Markets.


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CHS Inc a globally integrated energy, grains and foods system innovatively linking producers with consumers. On the behalf of their producer and cooperative owners.

A look at the value of the Danube H20 Highway, the region and how it helps CHS supplying grains to export around the world:

 

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CHS Danube and BSEA operations.

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Romania: Little country and Powerhouse

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Consider that for the entire Black Sea region corn exports have increased from 4 MMT to over 20 MMT, a five-fold between 2008 and 2013 and it’s only for corn.

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CHS Inc. farmer-owned with global connections.

How do you get to be the exclusive cooperative marketer of grain in the United States? By moving more than 2 billion bushels internationally to some 60 countries annually. The CHS distribution network spans seven U.S. cities and four continents, backed by local operations in North and South America, Europe and the Asia-Pacific.” -CHS about its Global Grain Distribution

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CHSinc trades a lot: In the U.S they are in the top #3. CHS is also omnipresent in the Europe-S.Am-N.Am triangle with marketing offices reporting round-the-clock observations from the fields. Having the opportunity to not rely only on third-party data is a huge advantage. Team members are closely monitoring immediate supply and demand, scrutinizing weather forecasts, production. shipments changes in each majors regions they operate.

Balancing the markets: Are the prices relations making sense ? CHS analysts compare actual numbers vs projections and adjust it accordingly, they work closely with their colleagues to manage the logistics, identify the opportunities, and understand the risks and benefits around specific buying and selling of agricultural commodities such as feed grains, pulse crops, oil seeds and other lucrative feed and food ingredients.

 

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Given that they have many sourcing options, they can also structure grains sales with very low-supply risk since and rely upon a completed global distribution network. However, key is volume. When grain exports have no markets, this infrastructure network has few benefits and becomes costly to maintain.

With a grab the bull by the horns attitude,  the Coop has succeeded its expansion outside the U.S in what are considered as the most risky environments such Russia and Eastern Europe, where many others have failed earlier.

This has a lot to do with market understanding ( what solutions farmers need ?), timing (getting in this market not too soon nor too late) and a solid risk management backed by cash-flows from mature BUs.

 

-The Trade Shipping and Finance Wizard © 2014

 Navigating the commodities markets with Freight and Spreads

Sources:

http://www.chsinc.com/

CHSINC, C magazine May/June 2014.

 

 

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2 thoughts on “CHSInc’s journey along the Danube H2O Highway-Connecting Farmers to Markets.

  1. It’s not unconventional for CHS to originate the soya from Argentina, Paraguay for the Russian Market. They also get NPK in the Black-Sea and North Africa for Argentina and South-America.

    With Regards,
    Cai Ling

    Like

  2. Thank you for sharing interesting ideas about agricultural markets and great information about the world grain market and commodities.

    During the pesos currency turmoil this spring, grain from Trigo Buenos Aires up the river was becoming very expensive in US$/mt. Farmers were hoarding the old crop as a currency. Many of our customers were unable to honored previously exports since they were just unable to cover sales at reasonable prices. It was challenging for Commodity Trade Finance as well because credit risk was rising and currency restrictions to name just a few… Because of its network in the region, CHS has sourced soyabeans from Paraguay and circumvented risks and to cover sales made to Rusia but we can’t say the outcome is similar for others who took losses.

    José Mendes
    Structured Trade Finance products (BBVA)

    Like

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