Cofco, China's state-owned food processing group, is teaming up with Itochu, the Japanese trading company, to buy grain and other agricultural commodities in global markets in an effort to build pricing power and combat rising food costs.

Itochu said yesterday it had signed a deal with Cofco to co-operate in procurement and distribution of grain, meat and other foodstuffs. It is the second tie-up between Cofco and a Japanese trading group, after Mitsubishi Corp last year bought a 4 per cent stake in China Agri-Industries, Cofco's Hong Kong-listed holding company.