Japan's Itochu to buy Ukrainian corn

Itochu Corp., a Japanese trading company, plans to buy 300,000 tonnes of corn from Ukraine this fiscal year due to a drop in US corn quality and rising Black Sea supplies.

Hajime Kaneko, deputy chief operating officer at Itochu's food company, said they recognise Ukraine as an important corn supplier, and Ukrainian corn quality and quantity are becoming stable and reaching the level that can meet the needs of Japanese consumers.

Russia aims to increase wheat and barley exports to Japan by building export facilities on the Far East coast, an idea that Itochu is interested in but has not committed anything into, Kaneko said.

Japan last bought corn from Ukraine in 2001, with the purchases reaching only 661 tonnes, according to data from the Finance Ministry.

Japan plans to diversify its supply sources after prices of corn, wheat and soy surged to records last year on rising demand, export restrictions and adverse weather. Japan bought 16.5 million tonnes of corn in 2008, with 99 percent from the US.

By expanding supply sources, Japan will be able to reduce purchasing costs as it can choose the cheapest source, said Chino Nobuyuki, president of Tokyo-based Unipac Grain Ltd.

Ukraine and Russia could become the US' strongest competitors in the Asian feed grain markets as they are low-cost producers, Chino said.

Itochu will build its first US grain export facility in Longview in Washington State, jointly with New York-based Bunge. and South Korea's STX Pan Ocean Co. The terminal will start operating in 2011.