Corn Imports by Japan May Drop 2.1% on Foot-and-Mouth Disease, Unipac Says

Corn purchases by Japan, the world’s biggest importer, may drop by about 2.1 percent this year as an outbreak of foot-and-mouth disease has spurred a mass cull of pigs and cattle, Unipac Grain Ltd. forecast.

Feed-corn demand may decline by about 250,000 metric tons from last year’s 12 million tons, said Nobuyuki Chino, president of the Tokyo-based grain trader. The government is culling 2.1 percent of the country’s swine herd and 1.5 percent of its cattle and cows to prevent the disease from spreading beyond Miyazaki prefecture in southern Japan, the second-largest pig- farming region and third-largest beef producer.

The cull will cut feed demand, leading to lower production by feed makers such as Marubeni Nisshin Feed Co. Corn is the largest ingredient in Japanese animal feed, representing 48 percent of the total, according to data from the Ministry of Agriculture, Forestry and Fisheries. Reduced purchases by Japan may extend the grain’s 10 percent decline this year in Chicago.

“Importers are going to decrease corn purchases gradually,” said Chino, who has traded grains for three decades and worked for Continental Grain Co. of the U.S. before establishing his company in 1999. “If the disease spreads to other prefectures, demand may weaken further.”

December-delivery corn on the Chicago Board of Trade declined 0.7 percent to $3.7225 a bushel at 11:28 a.m. in Tokyo.

Japan’s feed production grew 1.2 percent to 24.8 million tons in the year ended March 31, expanding for a fifth-straight year, ministry data show. Output may drop by 480,000 tons this year, Chino said in a telephone interview yesterday, based on his talks with contacts in the feed industry.

Pigs, Cattle

Feed for pigs represented 6.2 million tons, or 25 percent of the total output last fiscal year, according to the ministry. Feed for beef cattle and dairy cows accounted for 18 percent and 13 percent respectively.

Japan imported 10.6 million tons of feed corn from the U.S., or 96 percent of its total purchases, in the year ended Dec. 31, data from the Ministry of Finance show.

“Feed demand may drop in line with the number of culled animals,” said Tokio Tsuji at the livestock production and feed division of the agriculture ministry. “It is hard to project how big the decrease would be” as the disease hasn’t yet been contained, he said.

The first case of the disease was found on a cattle farm in Tsuno, a town in the eastern area of Miyazaki, on April 20. It was the first outbreak in Japan since 2000, and hadn’t been seen in 92 years at the time.

Wagyu Cattle

The outbreak has threatened the trade of so-called “wagyu” meat, also known as Kobe-style beef, known for its flavor and tenderness and often priced at a premium to other cuts. Exports have stopped to markets such as Vietnam, the U.S. and Singapore, according to the agriculture ministry. Animals within a radius of 20 kilometers of infected farms aren’t allowed to be shipped out of the area.

Japan has so far culled and buried 147,000 pigs, and will slaughter additional 60,000, including uninfected ones, said Tomohiro Nishio at the ministry’s animal health division. The government has also culled 23,000 cattle and cows and will slaughter an additional 43,000, he said.

The disease spread to Miyakonojo city, which includes a countryside area in south Miyazaki, last week, raising the risk it could extend to Kagoshima prefecture, Japan’s largest pig- farming region and second-biggest beef producer.

Kagoshima had 1.34 million pigs and 376,200 beef cattle as of Feb. 1, 2009, representing 14 percent of Japan’s total swine herd and 13 percent of beef cattle.

Foot-and-mouth is one of the most contagious livestock diseases and can have high mortality rates in young animals, according to the Paris-based World Organization for Animal Health, or OIE.

To contact the reporter on this story: Aya Takada in Tokyo atakada2@bloomberg.net

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