Feb. 27 (Bloomberg) -- Japan increased wheat prices to flour millers by almost 10 percent, raising costs for companies including Nisshin Seifun Group Inc. and Nippon Flour Mills Co. as a weaker yen made grain imports more expensive.
Overseas wheat sold by the government to millers will rise to 54,990 yen ($600) a metric ton on average in April from 50,130 yen, the Ministry of Agriculture, Forestry and Fisheries said today in a statement. It was the largest jump since April 2011, when prices surged 18 percent.
Japan’s currency slid to 94.77 per dollar on Feb. 25, the weakest level in almost three years, as Prime Minister Shinzo Abe pushed the Bank of Japan to expand stimulus and double its inflation target to 2 percent to jolt the economy onto a growth path. In Japan, where 60 percent of food is imported, the weaker yen has spurred an 8.7 percent advance in the benchmark Nikkei 225 Stock Average this year and helped exporters such as Toyota Motor Corp. raise profit forecasts.
“As a weaker yen is beginning to boost food prices, Japanese consumers may feel the pain rather than the benefit of the government’s economic policy,” said Kazuhiko Saito, an analyst at commodity broker Fujitomi Co. in Tokyo.
Flour millers will probably start raising prices around June, increasing costs for bread and noodle makers, Satoshi Fujiwara, vice president at Nomura’s equity research department, said in an interview on Feb. 14.
Masaaki Kadota, executive director at Japan’s Flour Millers Association, expects the increase will add about 25 billion yen a year in costs to the industry.
Japan depends on imports for almost 90 percent of its wheat as Asia’s second-largest buyer after Indonesia. The U.S. was the largest supplier to Japan in the last fiscal year, even as the worst drought since the 1930s hurt crops, accounting for 58 percent, or 5.6 million tons, of imports, ministry data show.
The agriculture ministry controls wheat imports and domestic sales to stabilize supply, and reviews prices to local millers twice a year.
Wheat in Chicago climbed 19 percent in 2012, the best performer among the 24 commodities tracked by the Standard & Poor’s GSCI Spot Index. Futures have lost 8.4 percent this year.
To contact the editor responsible for this story: Brett Miller at firstname.lastname@example.org