July 23, 2012
Japan''s corn usage in animal feed hits 20-year low
Maintaining a downtrend that began in 2010 when high prices aroused the world''s biggest corn importer to use more wheat instead, Japan''s usage of corn in animal feed reached 20-year low in May.
Preliminary government data, released on Friday (July 20), showed the ratio of corn in animal feed fell to 43.7% in May compared with 46% in the same month a year ago.
For every on-year percentage point decline in the amount of corn used in animal feed, Japan is likely to not buy 200,000 tonnes a year, according to a Reuters calculation.
Japan usually imports 16 million tonnes of corn a year, but traders have said this amount is likely to decline to around 15 million tonnes this year as the worst drought in decades shrivels up grains in its main supplier, the US, pushing up prices.
The ratio of wheat in Japan''s feed production in May rose to 3.6%, the highest in at least in two decades, from 0.9% a year earlier, the government data showed. Japanese feed makers started to replace some corn with wheat in 2010 due to a rally in US corn prices, and the portion of corn in animal feed has been falling since then.
US new-crop corn rose on Friday (July 20), taking its drought-driven rally to more than 55% in five weeks, as crops continued to wilt under the searing heat in the Midwest heartland.
Traders said the high prices may spur Japan to replace up to four million tonnes of US origin corn with corn from Brazil, Ukraine or Argentina this year.
For the first five months of the year, Japan imported 6.51 million tonnes of corn, down 0.8% from a year earlier. US origin accounted to 85% during the same period, down from 95% a year earlier.
"Brazil is the most competitive origin currently. We expect up to two million tonnes of Brazilian corn to be shipped to Japan this year, followed by up to one million tonnes from Eastern Europe and hundreds of thousands of tonnes from Argentine," a trader at a feed company said.
About 70% of Japan''s corn imports go into animal feed. Friday''s data showed overall compound feed shipments totalled 2.06 million tonnes in May, up 6.8% from a year earlier when feed demand fell after an earthquake and tsunami.