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Cookie Shortage Risk Prompts New Wheat Tender in Japan

Japan, Asia’s second-largest wheat importer, is looking from Canada to Australia to replace the U.S. western-white variety favored in cakes and cookies after the discovery of an unapproved gene-altered strain in Oregon.

The country plans to buy 2,000 metric tons in a special tender on July 5 that’s separate from its regular weekly purchases, said Hiromi Iwahama, a director of grain trading at the Ministry of Agriculture, Forestry and Fisheries. It last purchased 152,321 tons of other varieties, used in bread and noodles, in a tender on June 20.

Japanese millers have stockpiles equivalent to 2.3 months of consumption and could face shortages if replacements aren’t found after the suspension of western white shipments on May 30, Iwahama said. Sellers will tender Canadian western-red winter wheat, Australia’s premium white variety, soft-red winter grain from the U.S. and club wheat of Washington state.

“We have to hedge the risk that Japanese flour millers will face a supply shortage because of the prolonged suspension of imports,” Iwahama said today in a telephone interview.

The government can’t resume imports from Oregon before the health ministry establishes a testing method to detect modified strains, Iwahama said. Japan’s food-safety law bans sales of food containing GM crops that haven’t been confirmed safe by the health ministry. Contaminated supplies must be shipped back to exporting countries or disposed of.

The ministry controls overseas purchases and domestic sales to stabilize supply in Japan, which depends on imports for almost 90 percent of its wheat. The U.S. is the world’s biggest exporter.

Demand Test

The ministry may hold a second tender for alternative grain next month if demand from flour millers increases, he said.

Wheat for September delivery on the Chicago Board of Trade added 0.2 percent to $6.7850 a bushel at 3:46 p.m. Tokyo Time. Futures are set for the third straight quarter of losses.

The Consumers Union of Japan on June 4 asked the government to ban imports of U.S. wheat after the discovery of the strain developed by Monsanto Co. (MON)

Japan requires labeling of products containing gene-altered material. Food makers including Yamazaki Baking Co. don’t use GM ingredients because some consumers are concerned it may not be safe.

GM crops contain a gene from another organism to give them resistance to herbicide or the ability to produce their own toxin to kill pests. Promoters say the technology contributes to increase yields and lower output costs, while critics fear the environmental and health consequences.

Scientists said the rogue wheat was a strain tested from 1998 to 2005 by Monsanto, the world’s largest seed maker, which withdrew its application for approval amid concern buyers would avoid crops from the U.S.

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

To contact the editor responsible for this story: Brett Miller at bmiller30@bloomberg.net

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