US corn and soya futures fell on Monday, dragging down wheat prices in Chicago and Europe on concerns about shipments to earthquake-hit Japan, a major grain importer. The devastation caused by Friday's 8.9 magnitude earthquake and 10-metre tsunami was exacerbating an already bearish mood circulating across agricultural commodity markets in the past few weeks.
"Last year Japan took 15 million tonnes of corn from the United States. From the fundamentals side it's an issue for US corn. It is bearish in the market in the short term but the question is: for how long the infrastructure is going to remain down?" Brett Cooper, senior manager of markets at FCStone Australia. "Apart from being caught up in general sell off in commodities in the last couple of sessions, the demand side of the wheat story that has helped drive up prices has become quiet."
Animal feed manufacturing facilities in northern Japan, which accounts for 17 percent of the country's annual output, have been severely damaged by Friday's earthquake, although shipments into the world's top grain buyer were largely unaffected, industry sources said on Monday. Japan is the world's biggest importer of corn and No 3 buyer of soyabeans, the main ingredients in animal feed. It is also the world's fourth-biggest wheat importer, and plans to buy 4.96 million tonnes of milling wheat in the year to March 31. Tokyo and all ports south of Japan's capital were operating normally, while the rest were being assessed for damage, industry sources said on Monday. But at least six Japanese seaports handling international trade sustained major damage, including Hachinohe, Sendai, Ishinomaki and Onahama, and will not be back in operation for some time.
The ports of Hitachinaka and Kashima were also damaged, but could be back in operation within weeks. "Even so, Japan could import more corn, wheat and soyabeans in the coming weeks and thus contribute to a further reduction of already low global stocks," Commerzbank said in a note on Monday.
The head of the UN's Food and Agriculture Organisation, Jacques Diouf, said on Monday that surging global prices of basic foodstuffs raised the risk that the food crisis of 2007-2008 in developing countries would be repeated. US grain futures on Friday fell on fears Japan would slow commodity purchases, extending a sell-off in which wheat prices notched their biggest weekly loss in more than two years. Wheat plunged 13.6 percent last week, its biggest weekly loss in percentage terms since December 2008. Chicago Board of Trade (CBOT) wheat for May delivery fell 1.22 percent to $7.10 per bushel at 1132 GMT on Monday.
May corn dropped 1.09 percent to $6.57 a bushel, setting the stage for a seventh-straight losing session. Soyabeans for May also continued their downward streak, dipping 1.24 percent to $13.18 per bushel. Prices fell 5.6 percent during last week, the soya market's worst weekly sell-off since October 2010.
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