Cargill Inc. said it will spend $475 million to expand and update soybean processing plants in seven states, raising capacity at a moment when demand and prices are soaring for the nation's second-largest field crop.
The Minnetonka-based company said most of the spending will be at plants in Cedar Rapids, Iowa, Wichita, Kan., Kansas City, Mo., and Sidney, Ohio.
The closely held firm didn't disclose what the investment represented as a portion of its overall capital spending. But the announcement is another sign from Cargill of how heated the soybean market has become.
At one point late last year, a Cargill executive warned the market was nearly at a point of rationing.
U.S. soybean prices are now at the highest level in six years. One driver is trade demand, mainly from China after last year's truce in the trade war between Washington and Beijing.
When prices began to rise last fall, farmers dumped their stored supply into the market. U.S. inventories are now relatively low. Brazil, which produces in the U.S. winter, is expected to have a record crop, but its harvest is delayed somewhat because of rain.
The U.S. Department of Agriculture last month forecast that U.S. farmers will plant more than 90 million acres of soybeans this year, a record.
"We are positioning ourselves to meet the growing global and domestic demand for soy products both in food and fuel markets," Warren Feather, a managing director for Cargill's agricultural supply chain unit, said in a statement.
Cargill had previously announced the expansion at the Sidney site, where it is spending $225 million to double soybean crush capacity and speed up the loading and unloading of products.
And it is already halfway through the work at the Cedar Rapids plant to boost its processing capacity by 10%. In Wichita, Cargill aims to double the speed that soybeans can be unloaded. In Kansas City, the changes are focused on speeding up the loading of outbound trucks.
Prices are also high in the U.S. now for corn, rice, cotton and specialty crops like canola.