Viterra (TSX:VT, ASX:VTA) Profits from Canadian Wheat Board

Viterra, Inc. hit a new all-time high last week on absolutely massive volume. This gain of more than 50% occurred after they announced quarterly results and -- more importantly -- mentioned that they have received expressions of interest from other companies looking to buy the company. One reason for the buyout talk is Viterra will profit from upcoming changes to the Canadian Wheat Board. For decades the Canadian Wheat Board had a government regulated monopoly on grain marketing in Western Canada. After a recent (and controversial) political decision, the Wheat Board monopoly will cease to exist as of August 2012. This is a game-changer, and Viterra looks to be well positioned for the new landscape.

The daily stock chart shows the explosive move from $11 to $14 a week ago, with high volume follow-through this week. The monthly chart provides longer-term context and nearly four years of consolidation beneath the previous ATH price around $15.50. (click for a sharper image)

From Viterra's first quarter news release:

"Viterra remains confident that as of August 1, 2012 producers in Western Canada will benefit from the ability to market their wheat, durum and barley to buyers of their choice. In this new environment, Viterra expects to increase its earnings by leveraging its global grain marketing network in key export growing regions, attracting additional volumes and optimizing its operational efficiencies. As previously announced, Viterra expects to begin realizing modest benefits in the fourth quarter of 2012, with more significant impacts in 2013. In fiscal 2014 and beyond, the Company anticipates its annual EBITDA to increase by $40 million and $50 million per annum"

Viterra was formerly the Saskatchewan Wheat Pool before it took over a competitor and changed its name in 2007. It is now an international company with operations in Australia and other parts of the world. Here is more about the company from viterra.com:

"Viterra is a global food ingredients company poised for future opportunities. Driven by an entrepreneurial spirit, Viterra’s team contributes to the company’s integrated and well diversified business mix. We are committed to meeting the needs of global food manufacturers by leveraging our close relationships with farmers and our superior supply chain infrastructure. Viterra is strategically positioned in a growing global market, with predictable earnings and cash flow, a strong balance sheet, and a capital structure that supports growth. We operate in three distinct businesses: agri-products, grain handling and marketing, and value-added processing."

Although Viterra is not exactly a growth stock or a new idea, it stands to profit from a new market environment. Furthermore, there is a compelling story behind the development that could provide a strong tailwind going forward.

The United Nations Food and Agriculture Organization has estimated that world food output must increase 70 per cent to meet the needs of a global population by 2050

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