"Fewer players would mean fewer prices to compare," said a grain trader at one of Japan's top trading houses. "It would be easier to control prices if supply started lagging behind world demand in five to 10 years. As a buyer, it would be difficult to do business with the super-giants." On Tuesday, Minneapolis-based grain giant Cargill announced it would buy the global grain handling business of Continental in a deal that is expected to close by next April.

The deal is still subject to approval, however, by US anti-trust regulators.

A Cargill spokesman in Japan declined to comment on the Cargill-Continental merger.

A Continental official in Japan was not available for comment.

Every year Japan imports some 16 million tonnes of corn, including 14 million to15 million tonnes from the United States. Its purchase volume of soybeans amounts to some five million tonnes, with the United States accounting for about four million.

Traders estimated that Cargill currently imported about 35,000 tonnes of corn and 40,000 tonnes of soybeans to Japan each month. They added that while the size of Continental's business in Japan was uncertain, it was probably substantially smaller than Cargill's.

Some said that despite Cargill's efforts to enter the domestic market, most Japanese feed makers, flour mills and crushers bought foreign grains via Japanese trading houses to avoid complications, particularly those related to international payments.

The traders added that in many cases, Japanese trading firms also helped feed makers, flour mills and crushers sell their products to livestock producers and distributors.

They said, however, that in recent years these companies had not used trading houses as sales intermediaries as much as before, and that the companies oftendealt directly with their customers.

A grain trader at a mid-sized feed maker said: "In the feed business, you can't compete only through pricing. At a time like this, when end-users can't borrow money from banks, it's us, feed makers, who look after them." Japanese feed makers often extended credit to livestock producers to buy feed, the trader said.

Over the past few years, Cargill has given up some of its businesses in Japan, including a feed factory in Kagoshima and a fertiliser factory in Fukuoka, which many traders said was due to its failure to break into the long-established business relationships that predominate in Japan.

In addition, traders said Japanese importers owned most of berths and silos at ports so that it was difficult to circumvent them in purchasing foreign grains.

"(Cargill) can't do anything if a Japanese trading house denies Cargill access to its silo," another grain trader at a major feed maker said. "Even if Cargill's offers were cheaper, there's the question ofdelivery."

A trader at Japan's largest corn buyer, Zen-noh (the National Federation of Agricultural Cooperatives Association), said his organisation did not foresee much impact from the Cargill-Continental merger for the time being.

Zen-noh, which imports three million to four million tonnes of US corn every year, has its own export elevator in New Orleans and gets most of its supply from US subsidiaries, the trader said.

Asked about Cargill's move to sponsor Japan's failed food trader Toshoku Ltd, which Cargill Japan Ltd has said would help it gain a foothold in the downstream business, a trader said: "You don't know where (Cargill's) focus lies. It might be on rice."

"In terms of profits, that might be much more interesting. As agreed in the Uruguay Round, early in the next century a company may be able to import as much rice as it wants with an import tariff of six per cent," he said.