September 30, 2010
Japan to slash stockpiles of US corn as feed-rice production grows
Japan will slash its stockpiles of corn and sorghum by 33% next fiscal year, cutting imports as the largest buyer of US grain aims to boost feed-rice output to reduce its reliance on overseas supplies.
The country's corn and sorghum inventories will drop to 400,000 tonnes, from 600,000 tonnes in the year ending March 31, said Eri Utamaru, assistant director at the livestock production and feed division of the Ministry of Agriculture, Forestry and Fisheries. Corn represents about 90% of Japan's feed grains stored for this year, she said.
Japan is aiming to boost feed-rice production by tenfold to 700,000 tonnes a year within the next decade on concern that growth in China, an expanding global population and improving diets will tighten supplies. The government also wants to promote the use of waste materials from Japanese food processors, aiming to replace 630,000 tonnes of corn in feed annually by the year ending March 2021.
"Japan is enhancing the role of its rice as an alternative to US corn," said Nobuyuki Chino, president of Unipac Grain Ltd. Competition between Japan and other corn buyers intensified as China became a net importer this year and Russia's ban on grain exports following its worst drought in 50 years prompted countries such as South Korea and Egypt to seek alternative supplies from the US, the largest exporter of corn and wheat, he said.
Japan imported 11 million tonnes of feed corn last year, 96% of it from the US. Corn futures in Chicago climbed to a two-year high of US$5.29 a bushel on September 27 and traded at US$5.05.
The cost of importing US corn into Japan has increased to about JPY25,000 (US$298) per tonne, including freight, Chino said. In December, import costs averaged about JPY20,000 (US$240), according to Japan's Feed Supply Stabilisation Organisation.
The agriculture ministry plans to boost cash payments to domestic growers of rice, wheat and five other crops by 42% to JPY796 billion (US$9.6 billion) next fiscal year as it expands an income-support program to improve food self-sufficiency. Japan produces 40% of its food, the lowest level among industrialized nations, according to the ministry.
The ministry plans to cut its budget for stockpiling feed corn and sorghum by 34% to JPY2.75 billion (US$33 million) next fiscal year, Utamaru said.
Even if we reduce inventories, that won't hurt stability in feed-grain supplies," she said. "We expect more products to come from domestic growers."
Imports of wheat through state tenders may expand this fiscal year, helping to stabilize supply, as the ministry boosted purchasing opportunities for feed mills and trading houses, Utamaru said.
The ministry, which previously held feed-grain import tenders twice a month, began holding the events every week from July, responding to industry requests. Japan imported 1.35 million tonnes of feed grains through state tenders last fiscal year.
"Imports may increase by about 100,000 tonnes this fiscal year as we increased tenders," Utamaru said.
For corn, Japanese feed mills purchase the grain through trading companies in private deals with shippers such as Cargill Inc. For feed-use grains, the ministry holds tenders under the so-called simultaneous buy-and-sell system, in which end-users and trading companies jointly bid for supplies of any origin and quality.
