January 28, 2011

 

Canada rules out selling wheat to Japan

 

 

Canada will stop its supply of wheat to the Japan, because of quality and shipment difficulties, underlining the stringency in supplies of high-protein wheat.

 

This is despite Canada being the third-biggest wheat supplier to the Asian country.

 

The Canadian Wheat Board is unable to bid at tender held by Japan's ministry of agriculture, forestry and fisheries to buy milling wheat because of "some logistical issues," said Derek Sliworsky, general manager at the board's Tokyo office, in a phone interview today. The ministry cancelled a planned purchase of 37,110 tonnes of Canadian wheat in a tender today on a lack of offers.

 

Canada has difficulty providing milling wheat that meets quality requirements from Japanese flour millers as wet weather affected crop quality, said Nobuyuki Chino, president of Unipac Grain Ltd. in Tokyo. Japan bought Western Red Spring wheat from Canada in previous tenders for making bread.

 

"To secure supplies, Japan has to accept lower-quality wheat from Canada or find alternative grain from the US," Chino said by phone. "If Japan raises purchases from the US, that could accelerate a rally in global markets as other buyers are also seeking supplies from the US because of Russia's export ban and quality problems in Australia."

 

March-delivery wheat rose as much as 0.8% to US$8.63 a bushel on the Chicago Board of Trade, the highest price for the most-active contract since August 6, before trading at US$8.48 at 6:09 p.m. in Tokyo.

 

Futures advanced for an eighth day, the longest winning run in more than three years, on concern that record food prices may fan social unrest and fuel inflation, prompting governments to boost grain imports.

 

As an alternative to the Canadian wheat, Japanese flour millers may seek Dark Northern Spring wheat from the US, also used to make bread in Japan, Chino said.

 

Japan bought 671,000 tonnes of Western Red Spring wheat from Canada and 1.35 million tonnes of Dark Northern Spring wheat from the US in the year ended March 31. The US, the largest wheat exporter, is also the biggest supplier to Japan.

 

The Canadian Wheat Board expects to resolve the issues shortly, Sliworsky said, without giving a specific timeframe.

 

"Our crop did have some late harvest and quality issues, which did cause some downgrading," he said. "The west coast moisture has been heavy with avalanche issues in the Rocky mountains. That has hindered movement and loading in general."

 

Canadian wheat shipments to Japan are behind schedule, Masaaki Kadota, executive director at Japan's Flour Millers Association, said today by phone.

 

"We don't expect supply from Canada to become unavailable," he said. "If that happens, we might have to seek US wheat as an alternative."