TOKYO -- Japan snapped up Canadian wheat for making bread and noodles in a surprise tender that closed on Dec. 10, ramping up purchases from the North American nation as its prices fall on bumper harvests.
Increased buying from Canada by the world's sixth-largest importer of the grain is usurping appetite for wheat of similar quality from the U.S. Canada has been going head-to-head against the U.S. after producing a record wheat crop this year, filled with lower-than-usual protein levels, making its prices attractive.
"This entire month has been like a festival with all the (Canadian) buying going on," says a grains trader in Tokyo, referring to the latest tender and purchases at regular tenders.
Japan's Ministry of Agriculture bought a total of 111,173 metric tons of Canadian western red spring wheat in the special tender on Dec. 10, adding to the nation's stocks amid a shift away from pricier U.S. dark northern spring wheat.
Japan farm ministry purchases of western red spring wheat rose almost 40 percent from April to November from the same period a year ago to 899,810 metric tons, while orders for dark northern spring were down a third at 594,144 metric tons. Japan's fiscal year starts in April.
ADVERTISEMENT
In the same period, the average price Japan paid for western red spring wheat at 35,757 yen ($350) per metric ton was almost 2,000 yen cheaper than dark northern spring, based on the ministry data.
Japan typically buys five grades of food-quality wheat from Australia, Canada and the U.S., including the western red spring and dark northern spring varieties, via tenders usually issued three times a month that close on Thursdays.
Tokyo controls imports of wheat, its second most important grain after rice, to protect domestic farmers and insulate consumers from volatile markets.
Heavy snow
The extraordinary tender for the Canadian grade was issued to offset any delays caused by a possible increase in activity at Canadian ports because of its record harvest or by winter weather, a farm ministry official says.
Canada's monster crop levels have highlighted a logjam of moving grains and oilseeds from country elevators to ports by rail, just when Western Canada experienced heavy snow and frigid temperatures recently.
The tender was for less than the total of 162,011 metric tons via six cargoes originally targeted, however. The farm ministry official says he is looking into why they were unable to fill the whole tender, which was several times bigger than the 20,000 to 30,000 metric tons typically bought in the weekly regular tenders.
Traders say the logistical problems in Canada may have been behind this.
ADVERTISEMENT
"Although Canada had a bumper harvest, its export ability is maxing out, so the (price) gap should eventually narrow further as logistics get more expensive," says one Tokyo grains trader.
Japan has boosted its purchases of western red spring wheat around this time in past years to create ample stockpiles in case shipments across the Pacific Ocean were delayed in the past, but never at such a level, the trader says.
The government official says the surprise tender did not mark a change in Japan's wheat buying procedures.
The supplementary tender for the Canadian grade added to the four cargoes the agriculture ministry took in its regular milling wheat tender, more than the one or two they normally buy.
