COFCO Agri Establishes U.S. Ethanol Trading Desk
China’s state-owned COFCO Agri is establishing an ethanol trading desk in the U.S. as part of its strategic plan to expand into the U.S. market, reports AgWeek.
Sources have revealed to Reuters that the company hired ethanol trader, Aaron Parrish, away from rival Louis Dreyfus. The move is being seen as a means of entry to trade between the top two ethanol producers in the world - the U.S. and Brazil, as well as a way to meet growing demand from China.
Last year, ethanol shipments into China began to soar even as the economy slowed and the currency saw devaluation, according to an August 2015 report by Reuters. In the first half of last year, China imported more than 56,000 tons of ethanol worth $27 million – double the volume for all of 2014, and so far this year has imported 64.6 million gallons, representing an increase of 1,000% year over year according to Agriculture.com.
COFCO began shipping ethanol to China from its mills recently acquired in Brazil when it bought the agricultural assets of Nobel Group, while other Chinese buyers made record ethanol purchases from the U.S.
This deal is also the first major move by COFCO after it made known it was highly interested in gaining a foothold in the U.S. market. After an aggressive strategic campaign aimed at global expansion, and with sales totaling $16.9 billion, COFCO is currently pursuing deals that will gain it a presence in North America.
“Most of the other companies are western companies looking east, trying to participate in China,” COFCO CEO, Matt Jensen told Reuters. “On our side, we are China at the origin, from the roots.”