The dynamic of trade is changing in China as the country looks toward expanding sources of grain to ensure supply chain, food security and meet a growing demand for high-protein products for its rapidly expanding middle class.
In late February, COFCO Corporation, the largest food company in China, agreed to buy a 51 percent stake of Nidera BV – a Dutch grain trading company – to expand food supplies to China. Now, according to Reuters, state-backed COFCO is reportedly in talks to buy into Noble Group's agribusiness arm, helping China to develop a powerful agricultural trading house.
Nidera has operating platforms for procuring grain in Brazil, Argentina and central Europe as well as a global trading network, according to a news release from COFCO. In addition to grain, Nidera also trades oilseeds, vegetable oils, meal and bio-energy products.
Diversification is coming from other quarters as well. Last year, Japan's Marubeni Corporation purchased U.S. grains merchant Gavilon, which means that China's top foreign supplier of imported grain is now a U.S. subsidiary of a Japanese company.
"Like other countries, notably Japan, China is investing in foreign companies to protect their grain interests," says Alvaro Cordero, USGC manager of global trade. "China is looking to jump into the global consolidation game and create a company similar to the large U.S., European and Japanese trading firms."
According to the U.S. Grains Council's 2013 Annual Report, China was the largest importer of U.S. distiller's dried grains with solubles (DDGS) with 2.8 million metric tons and third largest importer of U.S. corn with 2.4 million tons (94 million bushels) for the 2012/2013 marketing year that ran Sept. 1, 2012 to Aug. 30, 2013. Forecasts show, even with this latest development, China will continue to import large amounts of U.S. grain.
Source: U.S. Grains Council