Pradium, due to launch by April, will allow feedlots, exporters, pet food companies and feed manufacturers to buy and sell grains, soybeans, oilseeds and other feed ingredients. The Internet exchange will initially be a matchmaking service, allowing users to search for grains before consummating deals offline. Eventually it will allow them to complete every aspect of a spot trading deal online, from financing to shipping.
While a handful of Internet grain hubs are already up and running-CyberCrop.com Inc., for one-Pradium is creating a buzz because of the sway its backers hold over the industry. Cargill is the largest private company in the U.S. and the biggest grain exporter in the world.
While the financial backers do not have to use Pradium's exchange, it is expected that they will do so. Indeed, even a small portion of their collective business could mean that hundreds of millions of dollars in grains could change hands through Pradium, whose name is derived from the Latin word for farm, "praedium."
Pradium will not make exceptions for or favor its big backers over smaller users, though it will do all it can to get and keep their business, said Rhem Whooten, CEO. "We have been very careful to create a structure where everyone's treated the same," he said.
A transparent market
Upon its launch, Pradium will allow users to search for corn and soybeans. Specifics, such as, product whereabouts and prices will be posted on the site. Users will then need to contact each other online or offline to close the deal. The system is intended to make the market, which today is clearly insular, more transparent, Whooten said. It is also meant to make matchmaking and transactions easier and less time consuming. "If you look at a screen with 30 bids and offers on it, compare that with how many phones you can hold up to your ear at the same time," Whooten said.
Within several months after it goes live, Pradium will roll out additional grain-related products, including oilseeds, wheat middlings and corn gluten feed. It will also introduce elaborate financing and shipping options. Whooten said that using Pradium will not only save users money on itemized costs such as paper, but also in much broader ways such as overall efficiency.
Annapolis, Md.-based Pradium plans to attract users with ads in commodities trade magazines and through participation at trade shows. Most of its marketing, however, will be one-on-one, Whooten said.
Bob Iati, senior research analyst at Boston-based consultancy TowerGroup, said that although most grain trading is done offline, Pradium has a good chance of succeeding. He noted that futures trading has taken off on the Web, and said commodities trading is a natural extension. "Many of the players are eager to involve themselves in this market," he said.