TOKYO: Japan's Mitsubishi Corp has muscled in on rivals in grain trading to become the country's top importer of feed wheat this year, trading sources said, as the Asian nation boosts purchases in response to higher prices of US corn.
Mitsubishi will import more than 240,000 tonnes of feed wheat for arrival by August, about half of the total, after frequently undercutting in government tenders prices offered by Marubeni Corp and Mitsui & Co, usually the biggest importers of the feed ingredient, the sources said, speaking on condition of anonymity because details of the auctions are not made public.
In Japan, corn is traditionally the main ingredient to feed poultry, swine and cattle, but local feed makers have started to increase the ratio of wheat since 2010 to react to a rally in US corn prices and as there are more sources for wheat.
Mitsubishi declined to comment on its feed wheat imports or its trading strategy.
Japan's biggest trading house traditionally has a greater focus on energy and metals trading but the trading sources said it had secured cheaper feed wheat supplies from Australia.
Japan's agriculture ministry, which maintains a tight grip on imports of wheat for food and animal feed to make costly local production sustainable, has said it would buy 764,000 tonnes of feed wheat in the year through March 2013, up 78 percent from a year earlier.
"Mitsubishi may have found economies of scale work well because the farm ministry now buys as much as 100,000 tonnes of feed wheat per month, compared with 10,000 tonnes or so in the past," said a trader at a Japanese feed maker.
Feed wheat imports to Japan since last year have been at least $20 per tonne cheaper than corn, the trader said.
Chicago Board of Trade wheat futures have been closely following the corn market in the past year as livestock producers replaced expensive corn with wheat in animal rations.
But that trend could be changing with front-month US wheat now at a premium to that of US corn due to tightening wheat supplies and a forecast of a record US corn harvest this autumn. The spread between the contracts widened last week to its highest since February 2011.
Mitsubishi's increased presence in wheat trading has sparked some speculation over whether it could still be interested in Gavilon, the US grain trader that is up for sale.
Marubeni, the biggest exporter of US grain and oilseed amongst Japanese trading houses, emerged as the front runner for Gavilon. Final bids are expected by the end of the month and sources said that Marubeni is close to a $5.2 billion deal.
Mitsubishi in early May denied that it was in talks on a purchase of Gavilon, but a banking source familiar with the talks has said that the company is monitoring the situation and could re-emerge as a contender if Marubeni pulls out.
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