November 17, 2011


Japan buys European grain as substitute to US grain


Japan made its biggest purchase of European grain in at least a decade, as a cheaper alternative to US supply.


The country bought about 800,000 tonnes from Ukraine after it removed a tax on exports last month. The purchase, made by five Japanese trading companies, was for shipments in November to March at prices that were about US$20 a tonne cheaper than US corn, Nobuyuki Chino, president of Continental Rice Corp. in Tokyo, said Wednesday (Nov 16).


Japan, which sourced almost 90% of its corn last year from the US, the biggest exporter, is seeking different options after a drought hurt the US crop, driving annual prices to an all-time high and curbing global food supplies.


"Japan joined other Asian buyers in finding cheaper alternatives to US corn in feed as the American supply became too expensive," Takaki Shigemoto, a commodity analyst at research company JSC Corp. in Tokyo, said today by phone. "A shift in demand will drag Chicago futures toward US$6."


Chino, who has traded grains for three decades and worked for Continental Grain Co. of the US before establishing his company in 1999, declined to identify the trading companies as the information is not public.


The country's livestock industry is increasing efforts to cut raw-material costs as it struggles to recover from the March 11 earthquake and Fukushima nuclear disaster, which destroyed feed plants and tainted beef and milk with radioactive cesium.


Corn futures for March delivery lost 1% to US$6.485 a bushel on the Chicago Board of Trade at 3:52 p.m. Tokyo time. Corn, which has gained 3.1% this year, is used mostly to make livestock feed and ethanol. Global food prices tracked by the United Nations fell 9.1% from a record in February.


Japan imported 7.3 million tonnes of feed corn in the nine months ended September 30, data from the finance ministry show. Of the total, 6.8 million tonnes was from the US and 231,160 tonnes was from Argentina, the second-largest supplier.


Ukraine's corn shipments in October may have climbed to a record on export demand and as farmers sold the grain after a 12% tax was removed, researcher UkrAgroConsult said November 8.


The duty, which had been in place since July 1, was abolished October 22. The Ukrainian government forecast 12 million tonnes will be exported in the marketing year that started July 1 from a record harvest of about 20 million tonnes.


Average corn yields in Ukraine rose to a record on favourable weather, reaching 6 tonnes a hectare (2.47 acres) on average as of November 8, the Agrarian Confederation said. The bumper harvest added to a glut of feed-grain supplies this year as wheat exports also expanded on increased shipments from countries including Russia and Kazakhstan.


Japan's agriculture ministry bought 63,280 tonnes of feed wheat in a weekly tender on November 9, the largest volume of this fiscal year, ministry data showed.

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