July 30 (Bloomberg) -- Japan will import corn from Ukraine for the first time in eight years under a plan by Itochu Corp. to purchase 300,000 metric tons, as the Black Sea region increasingly rivals the U.S. as a supplier.

The trading house plans to buy a fifth of its requirements from Ukraine in the year to March 31 after a drop in the quality of the harvested U.S. crop and as Black Sea area supplies increase, Hajime Kaneko, deputy chief operating officer at Itochu’s food company, said yesterday. Japan, the largest corn importer, last bought from the eastern European nation in 2001 when it purchased 661 tons, Finance Ministry data shows.

Japan, which relies on imports for 60 percent of its food, aims to diversify its supply sources after prices of corn, wheat and soybeans surged to records last year on rising demand, export restrictions and adverse weather. The country bought 16.5 million tons of corn in 2008, sourcing 99 percent from shippers of U.S. supplies including Cargill Inc., Archer Daniels Midland Co. and Bunge Ltd.

“By expanding supply sources, Japan may be able to reduce purchasing costs as it can choose the cheapest origin,” said Nobuyuki Chino, the president of Tokyo-based Unipac Grain Ltd. Ukraine and Russia could become strong competitors against the U.S. in the Asian feed grain markets as they are low-cost producers, he said.

Corn Price

Corn for December delivery gained 1.1 percent to $3.315 a bushel as of 6:13 p.m. Tokyo time on the Chicago Board of Trade. Prices rose to a record $7.9925 on June 27, 2008, on increasing demand for food, feed and biofuels and as higher oil prices boosted investor demand for commodities as an inflation hedge.

Ukrainian corn from the last harvest was as much as $30 a ton cheaper than U.S. crops during the past year, Chino said.

The country is forecast to be the world’s fourth-largest corn exporter in 2009-2010 with 3.5 million tons of shipments, according to a U.S. Department of Agriculture report July 10.

“We recognize Ukraine as an important corn supplier,” Kaneko said in an interview in Tokyo yesterday. “The quality and quantity of the nation’s supplies is becoming stable and reaching the level that can satisfy Japanese customer needs.” Itochu’s fiscal year ends on March 31, 2010.

Ukraine, Russia and former Soviet Union nations may increasingly export grain because of the region’s production potential, slow population growth and government policies to nurture agriculture as an export industry, Kaneko said.

Port Sharing

Kazakhstan, Russia, and Ukraine may create a pool of Black- Sea grain producers to coordinate policy on volumes and prices and share infrastructure such as ports, Russian Agriculture Minister Yelena Skrynnik said June 7 in St. Petersburg.

Russia aims to raise wheat and barley exports to Japan by building export facilities on the Far East coast, Kaneko said. Itochu is “interested” in the idea, although it has not committed anything to the project, he added.

The U.S., the world’s largest shipper of corn, soybeans and wheat, was a reliable supplier even when adverse weather reduced production and would remain the largest exporter to Asia over the next decade, Kaneko said.

Itochu will build its first U.S. grain export facility in Longview in Washington State, jointly with New York-based Bunge. and South Korea’s STX Pan Ocean Co. The terminal will start operating in 2011.

To contact the reporters on this story: Aya Takada in Tokyo atakada2@bloomberg.net; Ichiro Suzuki in Tokyo at isuzuki@bloomberg.net.

Last Updated: July 30, 2009 05:23 EDT