Record-high world prices of wheat may have driven some importers, such as Egypt, away from the market, but Japan has stepped up its buying to secure adequate supplies, a senior farm ministry official said. "Clearly, the market has entered into a new era in which a scramble for grains is going on," Yasuo Sasaki, director at the ministry's grain trade division, said in an interview on Tuesday.
"We cannot lose the battle." Wheat is a key grain for Japan's 127 million people, second only to rice, but the country grows less than 15 percent of the 5.7 million tonnes it consumes each year.
Chicago wheat futures for delivery in March soared to an all-time high above $10 a bushel last week, but Japan proceeded with its last regular tender of the year, buying US wheat for March-April shipments. The timing of the shipments reflected Japan's desire to secure supplies, since Japan usually buys wheat about two months in advance, so a tender held in December would normally be for February shipment.
Reflecting the higher prices, Japan plans to more than double its budget for wheat and barley imports for food use in the next fiscal year starting in April to about 370 billion yen ($3.2 billion).
At tenders held in November for the five major milling wheat types from the United States, Canada and Australia, the weighted average price was 56,504 yen ($494) a tonne, up 65 percent from a year, according to the latest available ministry data.
That means the ministry's wheat trading scheme is running in the red, since it set its October-March selling price to users at a weighted average of 53,270 yen.
Accepted bids in December were probably even higher, but even so the ministry last on Thursday bought 285,000 tonnes of milling wheat in a weekly tender, the largest amount in 2007.
ADVANCE BUYING: The purchase included 70,000 tonnes of US western white and 65,000 tonnes of US dark northern spring, both for shipment between March 10 and April 11. "We've decided to take in a certain amountin deals for US wheat available for export," Sasaki said. Supplies from drought-hit Australia have fallen sharply, and importers have scrambled to secure US soft wheat, such as western white wheat, market sources said.
Soft wheat is used for cakes and sweets. In a trading scheme introduced in April, Japan's farm ministry buys the five major types centrally via weekly tenders with licensed trading firms, then sells the wheat to flour millers at prices that are fixed twice a year.
In the eight months through November, Japan had bought 70 percent of an estimated 4.4 million tonnes of these five wheat types it planned to buy in the year to March. Some of the buying was accelerated to take place ahead of an expected hike in the farm ministry's selling prices in October.
But the ministry decided in August to curb the mid-year price hikes to 10 percent as it was the first time in more than 50 years that sales prices had changed more than once in a year. Sasaki said world grain supplies are expected to remain tight because of irregular weather, increased use of grains for biofuels and rising demand in fast-growth countries such as China and India.
Comments
Comments are closed.