Japan’s corn use in feed drops to 20-year low

Japan’s usage of corn in animal feed reached a 20-year low in May, maintaining a downtrend that began in 2010 when high prices spurred the world’s biggest corn importer to use more wheat instead.

Preliminary government data released Friday showed the ratio of corn in animal feed fell to 43.7 per cent in May compared with 46 per cent in the same month a year ago.

For every year-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 United States, pushing up prices.

The ratio of wheat in Japan’s feed production in May rose to 3.6 per cent, the highest in at least in two decades, from 0.9 per cent a year earlier, the government data showed.

Japanese feed makers started to replace some corn with wheat in 2010 due to a rally in U.S. corn prices, and the portion of corn in animal feed has been falling since then.

U.S. new-crop corn rose on Friday, taking its drought-driven rally to more than 55 per cent 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 U.S. 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 per cent from a year earlier. U.S. origin accounted to 85 per cent during the same period, down from 95 per cent 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 per cent 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 per cent from a year earlier when feed demand fell after an earthquake and tsunami.

— Risa Maeda reports for Reuters from Tokyo.

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