• Bloomberg


Corn purchases by Japan may drop by about 2.1 percent this year as the outbreak of foot-and-mouth disease in Miyazaki Prefecture has spurred a mass cull of pigs and cattle, according to Unipac Grain Ltd.

Feed-corn demand may decline by about 250,000 metric tons from last year’s 12 million tons, said Nobuyuki Chino, president of the Tokyo-based grain trader. The government is culling 2.1 percent of the country’s swine herd and 1.5 percent of its cattle and cows to prevent the disease from spreading beyond Miyazaki Prefecture, the second-largest pig-farming region and third-largest beef producer.

Japan is the world’s biggest importer of corn.

The cull will cut feed demand, leading to lower production by feed makers such as Marubeni Nisshin Feed Co. Corn is the largest ingredient in Japanese animal feed, representing 48 percent of the total, according to data from the Agriculture, Forestry and Fisheries Ministry. Reduced purchases by Japan may extend the grain’s 10 percent decline this year in Chicago.

“Importers are going to decrease corn purchases gradually,” said Chino, who has traded grains for three decades and worked for Continental Grain Co. of the U.S. before establishing his company in 1999. “If the disease spreads to other prefectures, demand may weaken further.”

Japan’s feed production grew 1.2 percent to 24.8 million tons in the year ended March 31, expanding for the fifth-straight year, ministry data show. Output may drop by 480,000 tons this year, Chino said Monday, based on his talks with contacts in the feed industry.

Feed for pigs represented 6.2 million tons, or 25 percent of the total output last fiscal year, according to the ministry. Feed for beef cattle and dairy cows accounted for 18 percent and 13 percent respectively.

Japan imported 10.6 million tons of feed corn from the U.S., or 96 percent of its total purchases, in the year ended Dec. 31, according to the Finance Ministry.

“Feed demand may drop in line with the number of culled animals,” said Tokio Tsuji at the livestock production and feed division of the agriculture ministry. “It is hard to project how big the decrease would be” as the disease hasn’t yet been contained, he said.

The first case of the disease was found on a cattle farm in Tsuno, a town in eastern Miyazaki, on April 20. It was the first outbreak in Japan since 2000, and hadn’t been seen in 92 years at the time.

The outbreak has threatened the trade of “wagyu” meat, also known as Kobe-style beef, known for its flavor and tenderness and often priced at a premium. Exports have stopped to markets such as Vietnam, the U.S. and Singapore, according to the agriculture ministry. Animals within 20 km of infected farms aren’t allowed to be shipped out of the area.

The government has so far culled and buried 147,000 pigs and will slaughter an additional 60,000, including uninfected swine, said Tomohiro Nishio at the ministry’s animal health division. The government has also culled 23,000 cows and will slaughter an additional 43,000, he said.

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