Anatomy of a grain trade

anatomy of a grain trade infographic

The global grain trading business is risky. Avalanches and mudslides can stop trains in their tracks. Striking union workers can halt grain loading at port. Freezing sea spray and high swells can delay ocean vessels for days. Commodity prices and costs shift constantly.

While those situations may be beyond a grain company’s control, there are countless other factors that a team of CHS experts successfully manages 365 days a year – always focused on efficiency, safety and profitability.

“Grain traders are problem-solvers,” says Justin Friesz, CHS global grain coordinator. “We anticipate issues and deliver solutions. We deploy critical thinking skills to manage risks. We create sufficient volume to generate efficiencies. And we collaborate as a team to focus on customer service and deliver grain when and where it’s needed. It’s a balancing act. We need a home for all that grain.”

That vigilance never stops, he adds. “Some risks recur at various points of the journey, with the most common being demurrage (penalties for delays at terminals), force majeure (unforeseeable circumstances), price, shrinkage, credit and quality risk.”

Ready and waiting

CHS has built an extensive grain origination network that links American farmers’ commodities to world markets with the highest level of quality control. For milling wheat headed to China, this includes strategic joint ventures at Pacific Northwest export facilities and a facility at the Port of Nantong that allows CHS to wield more control over grain handling speed and uniformity.

Beyond physical assets, CHS has invested in people who can help ensure purchased grain gets to the right destination on time and per specifications.

“It takes an army to execute a trade,” says Friesz. “Grain must be ready at the elevator to load the ship, the right ship must be in position, and the right documentation must be in place. Timing is everything. Once delays start, the penalties keep growing.”

“As we work through every step, we encounter risks and mitigate them,” says Brock Lautenschlager, director of rail services for CHS. “The one constant is that plans will change and, in the logistics business, they will change multiple times a day.”

Read the rest of the feature story in C magazine, online here.

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