Origination/Grain Trading Strategies

HighQuest has advised commodity trading firms seeking to increase their share of global trade flows by developing strategies to develop new origination and destination market trading capabilities. This includes identifying potential industry partnerships, acquisition targets and Greenfield opportunities in major markets including the U.S., Canada, Brazil, Argentina, the Black Sea region, Malaysia and Indonesia. 

Clients engage HighQuest for these projects due to:

 

  • Lack of experience working in the geography or market channel;

  • Insufficient internal resources to undertake the intelligence gathering and analysis and

  • Need for third-party objective strategy advice.  

 

Examples of origination/trading strategy projects we have successfully completed include:

 

Leading Global Trading Company Pursuing Expansion of its Origination Capability in the Americas

  • The client, which already owned a port terminal which provided it with a platform to originate commodities in North and South America, was seeking to expand options for inland origination through investment, partnerships or Greenfield opportunities.

  • HighQuest advised the client on specific areas within each region that should be considered for increasing its origination capability efficiently and identified specific potential JV partners/acquisition targets in these regions for the client to consider approaching.

  • HighQuest analyzed the cost of delivering commodities to the client’s port facilities from major crop producing locations in U.S., Brazil and Argentina and identified 31 potential partners/targets.

  • The client acquired one of the targets HighQuest identified in the U.S. and as a result has increased its handle of trading volumes substantially.

 

Major Asian Trading Company PNW Grain Seeking to Expand its Origination Capacity in the U.S.

  • The client which owned a port terminal in the U.S. Pacific Northwest(“PNW”), was having trouble originating sufficient volumes of oilseed and grains to operate its facility efficiently at full capacity.

  • HighQuest analyzed supply and demand trends in the region, identified the most competitive locations from which to source commodities within the PNW’s natural draw area, identified transportation bottlenecks that could occur in the future, and highlighted potential partners/targets the client should approach in order to expanding its origination capability competitively.

  • HighQuest developed profiles on 13 potential partners/targets for the client to consider approaching.

 

Asian Trading Company Seeking to Expand its Share of Canadian Grain Origination

  • The client, which was considering investing in Canadian grain origination, had never operated in Canada. The client saw a potential for originating Canadian wheat, barley and canola following the dissolution of the Canadian Wheat Board(“CWB”).

  • HighQuest advised the client on supply and demand trends in the Canadian market, the major players in the Canadian grain market, the location of their facilities and how they operate, identified the most competitive locations for sourcing oilseeds and grains regions in Canada, and assessed the impact of the CWB’s dissolution on Canadian grain exports and export capacity in the port at Vancouver.

  • While HighQuest identified potential targets for the client to approach, it advised the client that it would face challenges justifying an investment due to its lack of presence in the market and the ongoing consolidation of Canadian grain origination.

  • The client continues to monitor the situation but has yet to aggressively pursue an investment strategy.

 

Asian Trading Company Pursuing a Malaysian and Indonesian Palm Oil Origination Strategy

  • The client, which was considering building a Greenfield palm oil refinery in the U.S., needed a strategy to ensure its ability to source and import sufficient volumes of crude palm oil to supply the facility as palm is not grown in the U.S.

  • HighQuest advised the client on the most competitive locations for sourcing crude palm oil in Malaysia and Indonesia to be shipped to the U.S. West Coast. This include analyzing potential transportation costs and logistics bottlenecks that it could expect to face in the U.S. and identifying potential partners it could approach to negotiate long-term supply agreements for sourcing crude palm oil in Malaysia and Indonesia.

  • While the client has yet to invest in the construction of a new U.S. palm oil refinery, it has used HighQuest’s strategy recommendations to negotiate long-term palm oil contracts with the potential partners identified by HighQuest.

 

Trading Company Developing a Strategy to Develop its Black Sea Wheat Origination Capability

  • The client, seeking to back its efforts to develop destination markets for wheat in the Middle East and North Africa, was considering investing in Black Sea origination assets in order to source wheat more competitively.

  • HighQuest advised the client on supply and demand trends in the region, wheat quality, the major players in the region, the competitiveness on Black Sea wheat vs. other origins delivered into the region and identified potential acquisition targets/partners the client should approach to enhance its wheat origination capability.

  • The client recognized the competitiveness of Black Sea wheat shipped to the Middle East and North Africa and is approaching potential partners/targets recommended and profiled by HighQuest.

  • While negotiating with one of the parties recommended by HighQuest, it also experienced a substantial increase in origination volumes since the study was completed.