The owner of a new commodity and logistics hub at Northgate, Sask., says it is on the verge of announcing a major fertilizer handling agreement that will substantially expand its revenues and grain sourcing capabilities.
Ceres Global Ag Corp. president Patrick Bracken told a Nov. 6 conference call with investors that the company will share details of the fertilizer agreement within days.
The agreement will allow Ceres to receive train loads of fertilizer from a U.S. supplier and sell it to producers who deliver grain to the Northgate facility.
Read Also
Farming Smarter receives financial boost from Alberta government for potato research
Farming Smarter near Lethbridge got a boost to its research equipment, thanks to the Alberta government’s increase in funding for research associations.
“Ceres’s ability to offer fertilizer distribution will make Northgate a more attractive destination for farmers to sell their grain,” Bracken said.
“The opportunity for farmers to bring grain in and then backhaul fertilizer could be an enticement that substantially increases Northgate’s draw in the Saskatchewan and Manitoba area for grain origination.”
Bracken said Ceres is also on schedule with plans to develop Northgate’s grain handling facilities, which will include a new concrete grain terminal due for completion next year.
The company has been receiving grain and storing it in steel storage bins at Northgate.
He said the company remains on track to begin loading outgoing grain trains in late November.
Ceres is also loading propane at the Northgate facility and has an agreement with Canadian petroleum distributer Parkland Fuel to transload fuel from incoming trucks onto outbound trains destined for U.S. markets.
The company’s second quarter financial results reflected continued investments at the Northgate facility amid tighter grain handling margins caused by ample global grain supplies and soft demand.
Ceres’s revenues during the three-month period ending Sept. 30 were listed at $95 million, up $78 million from the same quarter last year. Net income for the quarter was listed at $100,000 compared to $1.9 million a year earlier.
Bracken said lower grain margins had a negative impact on profits, but the company continues to invest in Northgate and is taking steps to offset poor trading margins.
Those steps include building grain stocks at Northgate, negotiating new third party storage and handling agreements and developing new access opportunities to markets in the United States, Latin America and Asia.
The company handled nearly eight million bushels of grain in the second quarter, compared to two million bu. in the same quarter last year.
“Our grain business is facing many of the same challenges that our peers are facing,” Bracken said.
“Large crops around the world have led to low or flat prices and decreased market volatility, which limits trading opportunities. Meanwhile, disappointed and financially stable farmers have resisted selling, which has led to lower-than-normal (delivery) volumes and a fight for market share among grain companies.
Bracken said Ceres expects the global trading environment to improve early next year.
