USA – Multinational grain merchants, Cargill and Archer Daniels Midland Co. (ADM) have agreed to exchange ownership of some of their grain facilities in the US Midwest, a Reuters report reveals.

The deal whose financial details were not disclosed is expected to close later this summer.

Cargill has agreed to sell its Mount Vernon and Evansville, Indiana, elevators on the Ohio River to ADM.

While, ADM will sell its Beardstown, Naples and Keithsburg, Illinois, elevators along the Illinois River to Cargill.

The companies, among the largest agribusiness and commodity traders in the world aim to increase efficiencies in their operation based on their long-term strategic planning.

“We regularly evaluate our portfolio to ensure that our businesses and assets best fit our strategy to maximize long-term returns,” said ADM spokeswoman Jackie Anderson in an emailed statement.

“Cargill’s Mount Vernon and Evansville, Indiana, elevators are a great fit for our origination network.”

The exchange is expected reduce the number of buyers competing for farmers’ crops including grain and soybeans in some areas.  

According to the 2019 Grain & Milling Annual published by Sosland Publishing Company, ADM’s elevator in Beardstown has 701,476 bushels of capacity, while its Naples and Keithsburg elevators have capacity of 286,000 bushels and 340,000 bushels, respectively.

Cargill’s elevator in Evansville has capacity of 1.945 million bushels, while its Mount Vernon facility has capacity of 1.812 million bushels.

Amidst falling global grain margins, both ADM and Cargill have been restructuring operations to cut down on costs and simplify the business organisation.

For ADM, this included relocating its sales and commercial staff members of its milling division to its North American headquarters in Decatur, Illinois, U.S.

The company said it was realigning its US flour milling footprint with plans to close three of its flour mills in the country.

Cargill in 2015 launched a restructuring strategy including job cuts as the business struggles with slumping commodity prices, slowing demand in China and weakness in emerging markets.