May 5, 2006

Japan increases wheat purchases

Japan's hard red spring wheat purchases have increased by 235,000 tonnes, to 1.3 million tonnes, in FY2005, according to US Wheat Associates.

Japan's government wheat buying agency announced last December that they lowered the price of US wheat that they re-sell to Japanese flour millers, while keeping Canadian and Australian wheat prices at their current levels. The price change makes several US wheat classes more competitive in the Japanese market.

Japan's Ministry of Agriculture, Forestry and Fisheries (MAFF) purchases wheat from foreign producers, then resells it to millers at prices above market levels, using proceeds for other agricultural programmes.

US Wheat Associates has long urged the Japanese government to reduce resale prices so that Japan's milling industry would be better able to compete.

MAFF has edged prices down by 0.35 percent on average, with different adjustments for different wheat classes, according to Takeo Suzuki, USW's country director in Japan.

The lower price and the recent decreased supply of Canadian wheat has increased Japanese purchases of US hard red spring wheat by 22 percent in FY 2005, Suzuki said.