Wet weather threatening wheat crops in Australia is forcing Japan, Asia’s second-largest importer, to accelerate purchases as supplies tighten and prices climb.
Japan, which imports almost 90 percent of its wheat, will bring forward an import tender by two days to meet demand from flour millers, Toshiki Tojo at the grain trade division of the Ministry of Agriculture, Forestry and Fisheries said today by phone. The government plans to buy 193,417 metric tons from the U.S. and Canada Dec. 7 after securing 209,297 tons of American wheat in yesterday’s tender, the largest purchase in two years.
More than half of the wheat crop from Queensland state in Australia, the world’s fourth-largest exporter, may deteriorate to feed grade following heavy rain, tightening supplies, Wayne Newton, grains president of Brisbane-based farm group Agforce, said yesterday. Wheat in Chicago climbed to the highest level in almost four months as buyers seeking high-quality wheat may increase purchases from the U.S., the largest exporter.
“Global supply of high-protein wheat is becoming tight on bad weather in Australia and Canada,” Charlie Utsunomiya, director at the Tokyo office of U.S. Wheat Associates, said today. “Demand is shifting to the U.S. as Asian buyers are advancing purchases to secure supplies.”
Wheat futures for March delivery advanced as much as 2.7 percent to $7.69 a bushel on the Chicago Board of Trade, the highest level for a most-active contract since Aug. 6, when Russia’s export ban boosted the price to a two-year high.
The farm ministry, which controls overseas purchases and domestic sales of wheat to stabilize supply, normally imports milling wheat three times a month. In November it held four tenders to buy a total of 429,567 tons, the largest monthly amount since July. Yesterday’s purchase of U.S. wheat was the biggest volume since June 19, 2008, when it bought 227,000 tons.
“We are making purchases to secure the necessary volume as demand from domestic flour millers is increasing,” Shirara Shiokawa, director at the ministry’s grain trade division, said in a separate interview. “We are taking a flexible stance as we want to buy the grain at the best possible time.”
The ministry forecast in March that Japan’s imports of milling wheat will climb 3.3 percent annually to 4.96 million tons in the year ending next March, the highest level in four years, after domestic production declined on wet weather.
“Imports may become larger as Japanese wheat growers had a poor harvest for the second straight season this year,” Masaaki Kadota, executive director at Japan’s Flour Millers Association, said today by phone.
The country’s farmers produced 674,000 tons of wheat in 2009, 23 percent less than a year earlier, according to the ministry. The harvest this year may be similar to 2009, he said.
Japan bought 2.96 million tons of milling wheat from the U.S. in the year ended March 31, or 62 percent of total imports.
Japan also purchased 962,000 tons from Australia and 875,000 tons from Canada, the second-largest shipper, last fiscal year, the data from the ministry showed.