Jul. 7, 2009 (The Yomiuri Shimbun) -- General trading companies are looking to form business partnerships with foreign firms handling grain transactions in an effort to secure a greater share of the growing Chinese market.
In May, Marubeni Corp., the biggest trader in grain among the nation's trading firms, formed partnerships with Amaggi, a major Brazilian grain dealer, and Molino Canuelas, a major Argentine food company.
In addition, Marubeni plans to expand its channels for procurement and sales in Russia and eastern Europe through mergers and acquisitions.
Itochu Corp. decided in June to establish a grain export base on the West Coast of the United States with major U.S. trading company Bunge Ltd. (NYSE:BG) --a leading grain trading firm--and other partners.
Mitsubishi Corp., meanwhile, is looking for a business partner in South America with a view to strengthening grain collection and shipping operations.
Large quantities of grains procured by Japanese trading firms from overseas are sent to Asia, including shipments of soybeans to China, which have been increasing noticeably.
Rapid economic growth in China has led to rising urban populations there, while Westernization of eating habits have meant an increase in consumption of meat and cooking oil.
These trends have led to increased demand for soybean cake and meal for livestock and for soybeans used to make cooking oil. China's production of soybeans is unable to pace with domestic demand, meaning the country relies on imports for about 70 percent of what it consumes.
About one-third of soybeans traded worldwide are bound for China. Yet China is still forecast to face an 11 million ton shortage of soybeans in 2010 and a 28 million ton shortage in 2020.
China is now virtually self-sufficient in wheat and corn, though in the mid- to long term the country also is expected to increase imports of these grains.
"The supply of grain is having to be increased to keep up with the rising demand," a Mitsubishi Corp. official said.
Japanese companies also are trying to ensure they can find stable buyers in China.
Marubeni formed a business tie-up with the Sino Grain group, China's state-run corporation for stockpiling grain. Through the deal, Marubeni aims to provide 10 percent of the soybeans used for producing cooking oil in China, and to secure sales channels for soybean oil and palm oil.
Itochu, for its part, holds a 20 percent stake in Ting Hsin, a major food retailer operating in China and Taiwan, and hopes to establish a system covering the entire supply chain, from procurement of grain overseas through production and sales of food items in China.
Japan was once the world's biggest importer of grain, which has allowed its trading firms to develop stable operations with domestic buyers.
Akio Shibata, head of Marubeni Research Institute, said: "In addition to China, India is on the way to becoming a major grain importer. I expect Asia to be a huge grain consumer."
Japanese firms hope that through partnerships with foreign companies they will be able to exploit increasing demand and compete with major grain trading firms in the future.
