Canada Unable to Sell Wheat to Japan on Quality Grounds, Wheat Board Says

Canada, the third-largest supplier of wheat to Japan, ruled out supplying the grain to the Asian nation because of quality and shipment problems, highlighting the tightness in supplies of high-protein wheat.

The Canadian Wheat Board is unable to bid at tender held by Japan’s ministry of agriculture, forestry and fisheries to buy milling wheat because of “some logistical issues,” said Derek Sliworsky, general manager at the board’s Tokyo office, in a phone interview today. The ministry canceled a planned purchase of 37,110 metric tons of Canadian wheat in a tender today on a lack of offers.

Canada has difficulty providing milling wheat that meets quality requirements from Japanese flour millers as wet weather affected crop quality, said Nobuyuki Chino, president of Unipac Grain Ltd. in Tokyo. Japan bought Western Red Spring wheat from Canada in previous tenders for making bread.

“To secure supplies, Japan has to accept lower-quality wheat from Canada or find alternative grain from the U.S.,” Chino said by phone. “If Japan raises purchases from the U.S., that could accelerate a rally in global markets as other buyers are also seeking supplies from the U.S. because of Russia’s export ban and quality problems in Australia.”

March-delivery wheat rose as much as 0.8 percent to $8.635 a bushel on the Chicago Board of Trade, the highest price for the most-active contract since Aug. 6, before trading at $8.4825 at 6:09 p.m. in Tokyo.

Futures advanced for an eighth day, the longest winning run in more than three years, on concern that record food prices may fan social unrest and fuel inflation, prompting governments to boost grain imports.

U.S. Wheat

As an alternative to the Canadian wheat, Japanese flour millers may seek Dark Northern Spring wheat from the U.S., also used to make bread in Japan, Chino said.

Japan bought 671,000 tons of Western Red Spring wheat from Canada and 1.35 million tons of Dark Northern Spring wheat from the U.S. in the year ended March 31. The U.S., the largest wheat exporter, is also the biggest supplier to Japan.

The Canadian Wheat Board expects to resolve the issues shortly, Sliworsky said, without giving a specific timeframe.

“Our crop did have some late harvest and quality issues, which did cause some downgrading,” he said. “The west coast moisture has been heavy with avalanche issues in the Rocky mountains. That has hindered movement and loading in general.”

Canadian wheat shipments to Japan are behind schedule, Masaaki Kadota, executive director at Japan’s Flour Millers Association, said today by phone.

“We don’t expect supply from Canada to become unavailable,” he said. “If that happens, we might have to seek U.S. wheat as an alternative.”

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

To contact the editor responsible for this story: James Poole jpoole4@bloomberg.net

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