(Resource News International) — Japan’s consideration of lowering its wheat protein requirements is not expected to have much effect on Canadian wheat sales to that country, but the reduced protein content was expected to make competition for that market a bit tougher and in turn lower prices, according to market participants.
“Essentially, what the decision does is allow alternative suppliers to meet the specifications of Japanese millers more easily, which in turn could create a bit more competition for Canada,” said Glenn Lennox, a wheat analyst with the market analysis division of Agriculture and Agri-Food Canada in Winnipeg.
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Japan currently sources most of its wheat from the U.S., Australia and Canada.
A Japanese flour miller representative Feb. 13 said the country is considering buying less costly, lower protein wheat beginning in April to curb runaway import costs.
In terms of Canada being able to meet Japanese wheat specifications, there should be no problem, and in fact in most years there is lots of wheat under 12.5 per cent protein produced, Lennox said.
Lennox said Japan is obviously looking to diversify its suppliers in view of the high prices that have hit wheat values in general.
“The most likely thing here is that it will not affect Canada’s ability to supply but it will increase the competition into that market, which will have a tendency to lower values as a result,” Lennox said.
However, he also pointed out that Japanese millers have a very high standard for quality.
“So how much lower quality wheat the Japanese will take and blend into the mix is the real question,” Lennox said. “As a result, it was hard to pinpoint how much wheat Japan would actually source from other than their traditional outlets.”
Maureen Fitzhenry, the Canadian Wheat Board’s media relations manager said the CWB is in continual discussions with the Japanese, as a valued long-term customer, to ensure the CWB continues to satisfy their needs in order to maintain and increase market share for western Canadian farmers.
She said Japan’s investigation of other types of wheat has been going on for a while and the CWB does not expect any short-term impact on Canadian exports.
However, Fitzhenry said it was still unclear whether there will be any effect in the longer term.
Canadian wheat shipments (excluding durum) to Japan at the end of January in the 2007-08 crop year totalled 431,400 tonnes, according to figures from the Canadian Grain Commission. At the same time during 2006-07, 427,300 tonnes of Canadian wheat had been shipped to Japan. Sales of Canadian wheat to Japan during the entire 2006-07 season totalled 908,700 tonnes, the CGC figures show.
Lennox estimated Canadian wheat shipments to Japan in 2007-08 would also be very close to one million tons.
