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Japan May Raise Feed Wheat Imports as Substitute for U.S. Corn
Bloomberg
Japan, the world's biggest grain importer, may raise feed wheat purchases and sell more stockpiled rice to the livestock industry as producers seek cheaper alternatives to U.S. corn, which reached a record this month.

Japan may raise its feed wheat purchases to more than the import quota of 200,000 metric tons set for the year to March 31, said Kazuyoshi Honkawa, director-general at the livestock industry department of the Ministry of Agriculture, Forestry and Fisheries. The budget for purchases was doubled from a year earlier to 122.8 billion yen ($1.1 billion).

Corn soared this month as the worst floods since 1993 damaged U.S. crops. The gains are raising costs for companies including Nosan Corp., the largest feedmaker on the Tokyo Stock Exchange, and forcing some livestock producers to cut herds or abandon their business. Commodity costs pushed Japan's wholesale inflation to 4.7 percent in May, the steepest rate in 27 years.

``To alleviate damage from soaring corn, Japan should follow the example of South Korea, which may replace half of its corn requirements with feed wheat,'' said Nobuyuki Chino, president of Tokyo-based grain trading company Unipac Grain Ltd.

South Korea, the world's third-biggest corn importer, bought 105,000 tons of feed wheat this month from Black Sea countries at a lower price than corn, two people involved in the purchases said. The country last month made its first overseas purchases of feed wheat in about a year, buying 165,000 tons.

Best Performer

Wheat for September delivery traded at $8.8775 a bushel on the Chicago Board of Trade at 10:19 a.m. in Tokyo, down 34 percent from a record $13.495 on Feb. 27, as farmers are forecast to harvest a record crop globally. Corn doubled in the past year and reached an all-time high of $7.915 on June 16. The grain is the best performer this month in the UBS Bloomberg CMCI index of 26 commodities.



Japan, which protects domestic grain growers from foreign competition by controlling wheat imports, bought 88,375 tons of feed wheat through six tenders in the year ended March 31.

The government may hold more tenders and raise import volumes after doubling the budget because of the surge in global wheat prices to a record, Honkawa said in an interview in Tokyo yesterday. The drop from the high allowed the government to boost tonnages within the current budget, he said ``We can conduct wheat import tenders in a more flexible manner to meet the requirements from the industry,'' he said. Japan's sales of rice from import stockpiles to domestic feedmakers were also expected to rise by 50 percent to more than 600,000 tons this fiscal year, Honkawa said. The selling price will be almost equivalent to the cost of U.S. corn, he said.



Corn is the biggest ingredient in Japanese compound feed used for livestock, representing 49 percent of total output of 24.5 million tons in the year ended March 31, according to the agriculture ministry. Rice accounted for 2.3 percent and wheat represented 0.4 percent.

Japan imported 16.7 million tons of corn, or 18 percent of the grain traded on the world market, in the year ended Sept. 30, according to the U.S. Department of Agriculture.

Imports for feed totaled 12.1 million tons last calendar year, according to data from the Ministry of Finance. Shipments from the U.S., the world's largest producer and exporter, represented 93 percent of the total. Japan also imported more than 4 million tons for food and other purposes.

Crop Conditions

Corn crop conditions this month in the U.S. were the worst since 1996 and mirror the deterioration in 1993, the last time widespread flooding reduced yields.

Compound feed prices in Japan rose 18 percent from a year earlier to an average 62,800 yen per ton this quarter, according to the agriculture ministry. Zen-Noh, Japan's largest corn buyer, will raise its compound feed prices by 1,500 yen a ton on average, or more than 2 percent, from July.

Japan will increase floor prices for domestic pork and beef in July for a second time this year and boost subsidies for livestock farmers by 73.8 billion yen.
MGR Archive 25.6.2008
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