October 24, 2011


China's COFCO eyes overseas investments in agri commodities 


China's state-owned grains trader COFCO announced plans to secure overseas supplies of key commodities such as soy, wheat and sugar, through potential acquisitions in the US, South America, Australia and Russia.


"I'm trying to connect the Chinese consumer market with outside sources," said COFCO chairman, as rapid domestic demand for grains outpaces supply growth. "Whatever Chinese consume more of, need more supply of from outside, this is our area."


However, analysts noted that the COFCO chairman did not mention corn in which China became a net importer last year for the first time in over a decade. China has a publicly-stated goal of becoming self-sufficient in corn, for food security reasons.


For other food stuffs, fast-rising incomes and concomitant food demand means that China is forced to look beyond its borders, both because domestic production cannot suffice and because existing domestic production is raising an increasingly large toll on the environment, with drastic water shortages regularly highlighted as a long-term hindrance to sustainable growth.


This trend is set to continue, forcing a greater reliance on global supply chains and commodity markets, analysts said.

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