Japan and Korea face potential wheat disruption from US river closures

Japan, the biggest buyer of US wheat, may stockpile the grain or seek alternative supplies before the US closes its largest export gateway later this year for a three-month revamp, potentially delaying shipments.

 

Downstream lock gates on the Columbia River and the Snake River in the US Pacific Northwest will be repaired from mid-December through mid-March, closing the waterways to barge traffic, said Diana Fredlund, a spokeswoman for the Army Corps of Engineers Northwestern Division in Portland, Oregon. The work will affect shipments of Western White wheat, said industry groups in Japan and South Korea.

 

The potential supply disruption from the world's largest exporter may affect wheat prices, which have fallen 11% this year partly because of rising global inventories. The Columbia River is the largest wheat and barley export gateway in the US and the third-largest grain gateway in the world.

 

''Buyers are concerned that supplies of white wheat may be disrupted,'' said Park Jeong Seop, deputy general manager at the Korea Flour Mills Industrial Association. ''They are trying to work with suppliers and related parties to find ways to minimise any possible disruption.''

 

The repairs will be made to lock gates at the Dalles and the John Day dams on the Columbia River and the Lower Monumental dam on the Snake River, Fredlund said. This may boost demand for rail, which could slow overall shipments and result in congestion, Park said.

 

Lock gate networks on the two rivers are normally closed for two weeks every year for maintenance and repairs, the US Army Corps of Engineers said.

 

Japan's flour milling industry may look into options including transporting wheat by rail, expanding stockpiles before the revamp starts, or substituting Australian wheat for the US supplies, according to Masaaki Kadota, executive director at Japan's Flour Millers Association.

 

''We expect the government will discuss with US shippers to come up with a solution,'' Kadota said.

 

The Japanese government has no concrete proposals at the moment, said Shirara Shiokawa, director at the grain trade division of the Ministry of Agriculture, Forestry and Fisheries, which controls overseas purchases and domestic sales of wheat, barley and rice.

 

Japan was the biggest buyer of US wheat last year, importing 3 million metric tonnes, and South Korea was the fifth- biggest with 1.1 million tonnes, according to USDA data.