Sumitomo to export Australian wheat to Asia's markets

Sumitomo Corp. will start shipping Australian wheat to other Asian markets this year, doubling sales to the region by 2013.

Sumitomo, Itochu Corp. and Marubeni Corp. are seeking to expand foreign sales as food consumption in Japan, the largest grain importer, shrinks because of a declining and aging population. Rising incomes and improving diets are boosting demand for biscuits and noodles in the rest of Asia as wheat prices drop because of a global surplus. Shippers of Australian wheat are facing increased competition from Black Sea supplies.

"Deregulation of Australia's wheat market has given a chance for Japanese trading companies," said Nobuyuki Chino, president of Unipac Grain Ltd. in Tokyo. "Australia is in a better geographical position than other exporters for supply to Asia, the fastest-growing market."

Sumitomo is the only Japanese trading house to own grain storage and export facilities in Australia.

Australia's proximity to Asia's importers cuts shipping costs, providing a competitive advantage over the US and Canada, the biggest and second-largest exporters, Kurosaki said in an interview in Tokyo.

Sumitomo bought last month a 50% stake in Emerald Group Australia, a Melbourne-based grain accumulation company, expanding its crop-purchasing network nationwide.

Sumitomo is in talks with buyers outside Japan for Australian sales, Kurosaki said. Potential importers include Indonesia, Thailand, Malaysia, the Philippines, Vietnam, South Korea and Taiwan.