CHINA —Origin Agritech has announced that it has entered into a supply agreement with Yunnan Feeding Company under which will purchase 20,000 metric tons of Origin’s nutritionally enhanced corn (NEC).
Origin Agritech, an agricultural technology company based in Beijing, China, said its nutritionally enhanced corn reduces the need for expensive additives such as soybean meal for feedstock companies, improving margins.
Origin has been giving samples of the corn to potential feedstock customers so that they can validate the nutritional content of the corn. The corn has passed these tests, and companies now are placing orders.
Pricing will be based on the prevailing price of corn at the time of delivery, but based on current market prices, the Yunnan deal would be valued at US$464.41 per ton, or US$9.2 million in total.
Origin had previously announced a 50,000 metric ton supply agreement to two feedstock companies back in April of this year. The approximate combined value of the two orders totaled at US$32 million.
This backlog of orders does not include any impact from the previously announced collaboration with BaoDao Feed Ltd. to produce and sell specialized corn crops to feed producers.
The total market for corn feedstock in China is 50 million metric tons per year, which equates to potential net profits of US$22.46 billion.
Given the disruptive competitive advantages of Origin’s corn, BaoDao estimates that the companies will reach 10 million metric tons in sales within 3-5 years.
“It is quite gratifying to see the feedstock industry’s excitement and demand for our new corn variety, NEC,” said Gengchen Han, PhD, chairman of Origin Agritech. “We are focused on operations and ramping up production to catch up with the quickly increasing demand.”
Investors are responding positively to the supply agreement seeing as the stock price of Origin Agritech Ltd. (NASDAQ: SEED) gained over 12% during intraday trading following its announcement.
Over the years, Origin has established a robust biotechnology seed pipeline including products with glyphosate tolerance and pest resistance (Bt) traits.
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