* End of joint venture will boost competition
* Cargill is the dominant foreign grain co in Australia
* Cargill/GrainCorp milling venture to continue (Adds detail)
SYDNEY, April 3 (Reuters) - Global commodities firm Cargill Inc [CARG.UL] and Australia’s GrainCorp Ltd (GNC.AX) will end a grain buying joint venture after the scrapping of Australia’s wheat export monopoly made the two competitors.
Cargill will buy GrainCorp’s holding in Australian Grain Accumulation Services (AGA) for an undisclosed amount, GrainCorp said on Friday. GrainCorp will form a new grain buying team, while AGA will continue as a unit of Cargill Australia.
A monopoly over wheat exports held by AWB Ltd AWB.AX was replaced by a system that has seen 23 firms become licensed wheat exporters, including GrainCorp and Cargill as well as AWB.
“Now that both GrainCorp and Cargill can export bulk wheat, there was a thinking on both sides that having separate accumulation teams was probably preferable given that to a greater degree we are competitors,” said GrainCorp spokesman David Ginns.
“What it will do is increase competition in the market.”
In a research report last month, Citigroup said Cargill had emerged as the clear leader among foreign companies now licenced to export wheat from Australia.
Citigroup estimated that Cargill had gained an 8 percent share of Australia’s grain export market while GrainCorp had gained 12 percent.
Western Australian bulk handler CBH Group was the leader with 28 percent, helped by its dominating presence in Australia’s top grain exporting state, while AWB’s share had slipped to 21 percent.
AGA was established in 2003 to buy grain and oilseeds for the flour milling, oilseed processing and trading activities of GrainCorp and Cargill.
Cargill will maintain a close relationship with GrainCorp, having acquired a 5.9 percent stake in the Australian company in recent months.
The two companies will maintain their milling joint venture, Allied Mills. (Reporting by Bruce Hextall; Editing by Ben Tan)