May 13, 2009

Marubeni, Sinograin venture seen to boost soy sales to China

Marubeni Corporation is expected to boost its soy sales to China by 25 percent with its alliance to Sinograin Oil & Fats Corporation-the nation's biggest oilseed crushing company.

Marubeni has shipped more than 2.6 million tonnes of soy to China - the world's largest soy importer--since it began the exports in December, becoming the largest Japanese supplier. According to Satoshi Wakabayashi, general manager at the grain department of Tokyo- based Marubeni, sales are forecast to reach 4 million tonnes this year and rise to 5 million tonnes in 2012.


Marubeni and rival trading houses are seeking opportunities in China, the most populous and fastest-growing market, as demand in Japan, the second-largest soy importer, stagnates at around 4 million tonnes a year on a declining population. The company last month signed a cooperation agreement with Sinograin Oil & Fats, a unit of state-owned China Grain Reserves Corp., which crushes the oilseed for cooking oil and animal feed.


Wakabayashi said the alliance will earn Marubeni a 10 percent share in China's market for imported soy. About half of the company's supply will come from the US, and the rest will be from Brazil and Argentina.


China bought 3.71 million tonnes of soy in April, bringing imports to 13.86 million tonnes in the first four months, according to the customs data released May 12. That's a record for the period, Wu Jiaxi, analyst at Jinshi Futures Co. said.


China's soy imports may increase 5 percent to 42 million tonnes in 2010 from this year, rise to 45 million tonnes in 2011 and gain to 50 million tonnes in 2012, Wakabayashi said.


The alliance with Marubeni will help Sinograin reduce purchasing costs as the Japanese company operates export facilities in the US and Brazil, the world's largest and second-biggest soy exporters respectively, Wakabayashi said.


Marubeni bought eight storage facilities in North Dakota and Minnesota last year, becoming the first Japanese trading company to operate a network collecting corn, soy and wheat directly from US farmers.


Cooperation with Sinograin will increase Marubeni's grain bargaining power in producing countries as the Chinese company is expanding its crushing capacity to 6 million tonnes of soy a year, Wakabayashi said. Japan may crush 2.76 million tonnes of the oilseed this year, down 1.6 percent from last year, according to a March 17 forecast by the Ministry of Agriculture, Forestry and Fisheries.


Tuck Fukuda, team leader at the global team of Marubeni's grain section said the tie-up with Sinograin will eventually contribute to the stability of grain supplies to Japan. The stricter Japanese quality and safety requirements often make suppliers more inclined to sell to China, he said.


Marubeni also plans to start exporting non-genetically modified soy grown in China to food processors in Japan and South Korea this year through the purchasing and distribution network of Sinograin, Fukuda said.


Japanese and Korean food and feed makers seek non-genetically modified crops because of consumer concerns that genetically-modified varieties may not be safe. Japan paid a record premium of more than US$2 a bushel under contracts last year with US growers for non-GM supplies, as about 90 percent of US soy area was planted with modified varieties, said Nobuyuki Chino, president of Tokyo- based Unipac Grain Ltd.


Japanese demand for food soy is forecast at 1.03 million tonnes this year, according to the agriculture ministry.


Marubeni aims to triple its sales of non-GMO food soy in Japan to 300,000 tonnes as early as next year, importing the crop from the US, Canada, China and Brazil, Fukuda said.

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