China’s Cofco International aims to boost grain and soyabean purchases

Cofco International, the trading arm of the Chinese state-run food group, is looking to increase its reach in grains and soyabean procurement as it continues to build its operations to rival that of international agricultural traders.

With a global trading network spanning over 50 countries, Cofco International, which sources more than 40m tonnes of grains and oilseeds a year, said it wanted to increase this to more than 60m tonnes by 2022.

“Handling commodities on such a vast scale in such a short time is testament to the trusted relationships we have built with farmers,” Jingtao Chi, Cofco International chairman, told delegates at the FT Commodities Global Summit.

It was also investing in agricultural assets and port infrastructure to serve markets outside of China, and aims to double its purchases of grains from the “Black Sea” producing regions in Ukraine and Russia this year compared the year before. “Our new ports in the Black Sea region primarily serve exports to Western Europe,” said Mr Chi.

Early claims by the Chinese trader, that it wanted to be an international trader rivalling the ABCD traders — ADM, Bunge, Cargill and Louis Dreyfus — and not just procure food for China, were initially greeted with scepticism within the industry. Cofco International’s early struggles to integrate its purchases of Nidera, a Dutch grain trader, and the agricultural unit of Noble Group, completed in 2017, only served to reinforce that view.

However, the trader now seems to be gaining its stride, in building operations especially outside of China. Of the 106m tonnes of grains and oilseeds the group moved last year, only 20-30 per cent goes to buyers in China, the company said.

With about 60 per cent of its global assets and 75 per cent of its workforce in South America, it managed to capitalise on the US-China trade war, moving soyabeans, a key feed for livestock, from Brazil to China.

The group is keeping a close eye on the political and economic situation in South America. Mr Chi said: “In Brazil, President Bolsonaro’s reforms will have currency implications, while in Argentina anti-inflation efforts and export tax policies will impact commodity markets.”

As it joins the ranks of the top agricultural traders, Cofco International has become more aware of the spotlight on sustainability. It has joined fellow traders in introducing transparency and reporting measures on soya production in Brazil’s Cerrado region. It is also working with farming communities, NGOs, consumer brands and banks to create a compensation scheme to encourage forest preservation in the Latin American country.