• Bloomberg


Japan, the world’s largest corn buyer, may buy less of the grain as feed-wheat imports almost quadruple this year to the highest level since 2001, as livestock producers seek to cut costs.

Feed-wheat imports may surge to 430,000 metric tons from 112,000 tons in the year that ended March 31, said Ikuho Tomita, deputy director at the agriculture ministry’s feed supply and demand planning office. Imports were 473,000 tons in 2001.

Higher imports may stem a 25 percent decline in Chicago wheat futures this year as the United Nations expects the biggest-ever global harvest while Russia and Ukraine ease export restrictions, boosting supply. Feed wheat was offered to Japanese buyers at about $50 a ton cheaper than U.S. corn as shippers compete for sales, said Nobuyuki Chino, president of Continental Rice Corp. in Tokyo.

“Increased purchases of feed wheat means Japan’s corn imports will decline, as overall demand for feed grains isn’t growing,” Tomita said in Tokyo. Japan’s feed makers, recovering from damage caused by the March 11 earthquake and tsunami, “are taking advantage of an expanded gap in purchasing costs between corn and wheat.”

The agriculture ministry, which controls overseas purchases and domestic sales of wheat to stabilize supply, has given feed makers permission to buy the grain beyond the government-set ceiling of 300,000 tons this fiscal year. This will be the first breach of the limit in 48 years, as demand for corn substitution increased on a widening price gap, Tomita said in an interview.

The ministry obtained approval from the Finance Ministry to increase purchases and secured a ¥65 billion ($842 million) budget to import wheat and barley for sales to feed makers this fiscal year, he said.

The farm ministry holds feed-grain import tenders every Wednesday for sales to 10 livestock industry organizations, including Zen-Noh, the nation’s largest farmer group. In September, the ministry sold feed wheat at ¥28,073 per ton on average.

Wheat futures on the Chicago Board of Trade slumped to $5.88 a bushel on Nov. 23, the lowest since July 2010. Corn futures were at $5.955 a bushel. The price reached a three-year high of $7.93 on June 9.

Japan imported 169,318 tons of feed wheat in the nine months that ended Sept. 30, data from the Finance Ministry showed. Half was from Australia and half was from Canada.

Japan is also seeking grain from the United States and the Black Sea region, after securing about 20,000 tons of American soft-white wheat last month, said Charlie Utsunomiya, director at the Tokyo office of U.S. Wheat Associates.

Ukraine scrapped export duties last month, spurring Japanese trading companies to buy 800,000 tons of corn as an alternative to U.S. supply. The country removed duties of 12 percent on corn and 9 percent on wheat on Oct. 22 that had been in place since July 1.

Feed wheat in Japan is mainly given to hogs. Pork production has increased as Japanese consumers shift tastes after fallout from the crippled Fukushima No. 1 nuclear plant tainted cattle feed and beef.

Domestic pork production increased 4.1 percent in August and 1.9 percent in September from a year earlier after the government detected cesium-tainted beef in July, slashing local demand and sending prices tumbling, according to data from Agriculture & Livestock Industries Corp. in Tokyo.

Farmers also increased pork output after an outbreak of foot-and-mouth disease last year, said Akio Tamai, assistant manager for the company’s planning division.

Japanese beef production fell 3.7 percent in September after plunging 12 percent in July and 10 percent in August, as demand also shifted to chicken and imported beef, he said.

The average price of A4-grade “wagyu” beef plunged 15 percent to ¥1,435 a kg in July on the Tokyo meat market before recovering to ¥1,446 in September.

“Farmers are struggling with low prices for meat and high costs for feed,” Tamai said.

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