June 26, 2008

 

Japan to boost wheat imports as alternative for US corn

  
  

Japan is expected to raise its feed wheat purchases to more than the quota of 200,000 tonnes for the year to March 31 as producers seek cheaper alternatives to US corn, which peaked to a record this month.

 

Kazuyoshi Honkawa, director-general at the livestock industry department of the Ministry of Agriculture, Forestry and Fisheries, said the budget for purchases was doubled from a year earlier to JPY122.8 billion.

 

The gains in US corn prices 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.

 

Nobuyuki Chino, president of Tokyo-based grain trading company Unipac Grain Ltd., said that 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.

 

South Korea, the world's third-biggest corn importer, bought 105,000 tonnes of feed wheat this month from Black Sea countries at a lower price than corn.

 

Last month, the country made its first overseas purchases of feed wheat in about a year, buying 165,000 tonnes.

 

Wheat for September delivery traded at US$8.8775 a bushel on the CBOT in Tokyo, down 34 percent from a record US$13.495 on February 27, as farmers are forecast to harvest a record crop globally.

 

Corn doubled in the past year and reached an all-time high of US$7.915 on June 16.

 

Japan bought 88,375 tonnes 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.

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