Marubeni to take on big five crop traders

by World Grain Staff
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TOKYO, JAPAN — Marubeni, Japan’s biggest grain trader, aims to take on the world’s largest agricultural commodity traders by shipping more crops on the back of strong demand for food in emerging Asia, according to a Nov. 28 article in the Financial Times.

Marubeni, presently the sixth-largest grain trader by volume in the world, expects to ship 25 million tonnes to customers by 2012 or 2013, up from an expected 20 million tonnes this year, chief executive Teruo Asada told the Financial Times.

The article noted that the company has nearly doubled its grain shipments in the past five years. Japanese trading companies, or sogo shosha, have traditionally focused on importing oil and other commodities to their resource-poor home market. But with Japan’s population shrinking and its economy long past its high-growth phase, Marubeni and competitors Itochu, Mitsubishi, Mitsui and Sumitomo are now turning abroad.

After focusing on oil, metals and minerals for decades, the Japanese trading houses have identified agricultural commodities as a source of growth as concerns about food security spread in Asia on the back of the food shortages in 2007-08.

To break into the top five traders would require Marubeni to take market share from the so-called “ABCD” groups — ADM, Bunge and Cargill of the US and France’s Louis Dreyfus — and Swiss-based Glencore.

Given booming demand in China and other emerging markets, however, those companies are also likely to expand their businesses as long as supplies can keep pace. Marubeni will also face competition from Asia-focused traders, including Singapore-based Wilmar and Olam International and Noble Group of Hong Kong.

Still, Asada told the Financial Times that Marubeni was better positioned than its U.S. and European rivals to take advantage of new opportunities in Asia, especially China.

“The grain majors are simply supplying corn, soy and other grains to China. But we are using our grain to get into related businesses like milling and animal feed processing,” he said. “That’s the sort of thing that only a general trading company can do.”