soybean field

USSEC Views Marubeni’s Acquisition of Gavilon as Growth Opportunity for U.S. Soy


Japanese trading house Marubeni Corporation will use its recently acquired Gavilon Holdings LLC to supply large amounts of North American grain to Asia and will begin production of formula feed in Southeast Asia.  Marubeni plans to secure export facilities and vessels in the U.S. enabling it to ship grain to the Middle East and North Africa, among other markets, as it seeks to challenge global market leader Cargill Inc.

Marubeni completed its acquisition of Gavilon on July 6, excluding its energy business.  The two firms handle a combined 33 million tons of grain a year, second only to Cargill.  Combining Marubeni and Gavilon grain storage facilities will rank the group second in the U.S. for grain collection, at 9.5 million tons.  This vast procurement network will allow Marubeni and Gavilon to ship larger amounts of grain to Asia, where meat demand continues to rise.  The company will produce formula feed in Asia using soymeal and other grains such as corn and hopes to increase its profitability by vertically integrating its operations such as grain collection, exports, feed production and livestock-raising.
Marubeni supplies approximately 20% of China's soybean imports.  Chinese regulators, when approving the Gavilon purchase, required Marubeni and Gavilon to sell soybeans separately, making synergies difficult to reap in this area.  It appears, however, that this condition will be in force for only the next several years, and the sales operations could be united in the future.
According to USSEC CEO Jim Sutter, “The merger of Marubeni and Gavilon provides an even greater opportunity for the export of U.S. soy to Asia, which is already one of our fastest-growing markets.  We look forward to the chance to provide further service in this part of the world.”