By Jeremy Grant in Singapore and Lucy Hornby in Beijing

China’s largest grain trader, China National Cereals, Oil and Foodstuffs Corp, is in talks with Singapore-listed Noble Group about forming a joint venture in sugar, soyabeans and wheat that would propel the Chinese group further towards the forefront of global agribusiness.

The talks, focused largely on Noble’s businesses in South America, comes just a week after Cofco bought a 51 per cent stake in Dutch agricultural trading house Nidera for almost $1.3bn.

The deals suggest that the Chinese group is seeking to get closer to the source of grains and other soft commodities to satisfy long-term growth in demand from the Chinese population.

Shares in Noble, one of an emerging group of powerful Asian commodity and agribusinesses, jumped 5 per cent after the company said in a stock exchange filing that it was “currently engaged in discussions with a consortium in relation to a potential joint venture” around its agriculture business.

One person familiar with the matter said the talks, which have been in train for about six months, involve Noble’s four sugar mills in Brazil, as well as soyabean crushing plants in Argentina, Paraguay and Uruguay and grain silos in Ukraine.

They also involve Noble’s network of ports and commodity terminals that are used to ship commodities to markets such as China. A deal could be struck “within weeks”, the person said.

Two-thirds of the world’s international soyabean trade already ships to China. Analysts expect China’s corn imports will treble in the next decade, as rising incomes spur demand for meat and the feed grains used to fatten chickens and livestock.

A joint venture with Cofco would allow Noble to reduce its exposure to the upstream side of the business, free up working capital and bring it closer to the source of demand. That would allow the group to ride out volatility in commodity prices more easily.

Agriculture is the smallest part of Noble’s business, accounting for 15 per cent of fourth-quarter sales in 2013. The rest is energy and metals trading.

Macquarie Securities said the agriculture unit had been “buffeted by overcapacity” in key markets, such as Chinese soyabean crushing and Brazilian sugar milling, but that its profitability “should start normalising” this year.

Cofco’s purchase of a 51 per cent stake in Nidera allows it for the first time to bypass international trading houses and buy grains and soy directly from South America.

Cofco has already expanded into downstream activities, including soyabean crushing, milling and pig breeding. It also diversified into branded foods, including edible oils and wine, and has large investments in the dairy and hotels sectors.

China’s growing consumption of meat and limited land and water for agriculture have forced policy makers to abandon a longstanding ideological reluctance to import grains.

That has freed companies like Cofco to position themselves for increased international grains trading, and compete directly with international houses like Cargill and Bunge.