February 27, 2012 / 7:44 PM / 6 years ago

U.S. farm co-op CHS buying Canada durum

WINNIPEG, Manitoba (Reuters) - The largest U.S. grain co-operative, CHS Inc (CHSCP.O), is buying Canadian durum and looks to bulk up on other crops there to seize the “phenomenal” opportunity left by the end of the Canadian Wheat Board marketing monopoly later this year, a CHS executive told Reuters on Monday.

In mid-December, a Canadian bill became law that will end on August 1 the Wheat Board’s monopoly to market western wheat and barley for milling or export. Canadian grain handlers such as Viterra VT.TO, Cargill CARG.UL and Richardson International quickly began signing contracts with farmers to buy grain for delivery after the monopoly ends.

Minnesota-based CHS has so far bought a modest 65,000 to 70,000 tonnes of 2012 durum wheat from Western Canadian grain handlers, who will eventually move it to CHS elevators in the United States, Tom DeSmet, vice president of marketing for CHS, said in an interview.

CHS re-sells the grain to end users, such as grain millers.

Canada is the biggest exporter of spring wheat, durum, canola and oats. The Wheat Board’s monopoly has been in place for 69 years.

“This is phenomenal. (Ending the monopoly) is huge to the world,” DeSmet said on the sidelines of the Wild Oats Grainworld conference in Winnipeg. “The durum world, the grain world, has got their eyes on Canada bigtime.”

Grain buyers, like millers, are worried about ensuring they can maintain supplies after the board loses its monopoly and are giving CHS flexibility in filling orders, he said.

“The people we work with are giving us options. ‘I’ll take Canadian (grain) at this price, U.S. at this price, you supply it.’ And I think the reason they’re doing it is they’re very concerned and want to give us the flexibility to make sure they get the product.”

CHS is buying from virtually all Canadian grain handlers, DeSmet said.

In past years, CHS bought grain from the Wheat Board, to which western farmers were required to sell wheat.

CHS opened its first Canadian grain office late last year.

Durum will be a major focus of CHS in buying Canadian crops, DeSmet said, but it will look at other crops as well. CHS also handles spring wheat, canola and flax - among other crops - which western farmers grow.

Farmers have been reluctant sellers of 2012 crops so far, he said, as prices slide and in two months planting season begins.

CHS does not intend to buy directly from Canadian farmers and has no plans to buy or build country elevators in Western Canada, DeSmet said.

Canada is poised to boost its acreage of most major crops this spring, including spring wheat, durum and canola, as dry conditions give farmers greater planting opportunity after several flood years left many fields fallow.

Reporting by Rod Nickel in Winnipeg; Editing by Bob Burgdorfer

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