March 5, 2014

China National Cereals, Oil and Foodstuffs Corp (COFCO), China's state-run grain trader, is in talks with Singapore-listed Noble Group about forming a joint venture in sugar, soy and wheat, reported by Financial Times.

This comes just a week after COFCO sealed the deal for the purchase of a 51% stake in Dutch grain trader Nidera for about US$1.3 billion.

Financial Times cited a person familiar with the matter as saying that the deal would involve Noble Group's four sugar mills in Brazil, soybean crushing plants in Argentina, Paraguay and Uruguay and grain silos in Ukraine.

Noble Group mainly deals in energy and metals trading. Agriculture is the smallest part of the company's business, accounting for 15% of sales in the fourth quarter of 2013.

If the deal goes through, COFCO will further consolidate its status as a major global player in agribusiness. It is also proof that the Chinese government is increasingly eager to secure access to the source of grains and other soft commodities.

Growing food demand from the Chinese population and China's limited land and water resources for agriculture are pushing the government to import more grains from abroad.