Report Highlights:

In line with the declining livestock numbers, Japanese feed production decreased for the fourth consecutive year in MY2014/15 (October 2014 – September 2015). Japan typically imports the majority of its barley from Australia, Canada and the United States and the majority of its sorghum from Argentina and the United States. However, China's imports of barley and sorghum increased dramatically in MY2014/15 – importing most of Australia's exportable supply of barley and sorghum and most of the United States' sorghum exportable supply. As a result, Japan was forced to diversify supply sources for barley and relied heavily on Argentina for sorghum.

Overall Market Situation

Up-to-date feed production statistics and a detailed breakdown of feed ingredient utilization follow. Production of compound and mixed feed decreased 1.4 percent for MY2014/15 (year ending September 2015) over the previous year. Use of rice increased 60 percent in MY2014/15 at the expense of corn, sorghum, wheat and barley. The sorghum utilization ratio in compound feed in MY2014/15 marked a record low of 3.9 percent, and the composition ratio of barley was the lowest in the past seven years. MAFF's strong push for production and use of feed rice is expected to continue in MY2015/16, further reducing the use of other ingredients in compound feed. In recent years, the composition ratios of corn, sorghum, rice and wheat in the compound feed for poultry and swine fluctuated within the 2 - 5.5 percent range, with feed millers changing the composition ratios of these ingredients based on prices.

Japan maintains a feed price stabilization program that consists of a combination of a MAFF subsidy and an industry fund to help absorb sudden surges in compound feed prices. It is activated when the import cost of ingredients in a particular quarter exceeds the average import cost of ingredients in the previous year. No compensation payments were made for the first third quarters of Japanese fiscal year 2015 (JFY; April – December 2015). In the third quarter (October – December 2015), the average price of imported raw materials for compound feed (30,341 yen/metric ton) was 2,909 yen lower than the average import cost of ingredients in the previous year, reflecting lower prices for soy meal and freight .

BARLEY

Barley

2013/2014

2014/2015

2015/2016

Market Begin Year

Oct 2013

Oct 2014

May 2015

Japan

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

59

59

60

60

60

61

Beginning Stocks

367

367

393

393

360

380

Production

182

182

170

170

170

177

MY Imports

1294

1294

1097

1097

1300

1150

TY Imports

1294

1294

1097

1097

1300

1150

TY Imp. from U.S.

165

183

71

87

0

0

Total Supply

1843

1843

1660

1660

1830

1707

MY Exports

0

0

0

0

0

0

TY Exports

0

0

0

0

0

0

Feed and Residual

1100

1100

950

950

1100

1000

FSI Consumption

350

350

350

330

350

330

Total Consumption

1450

1450

1300

1280

1450

1330

Ending Stocks

393

393

360

380

380

377

Total Distribution

1843

1843

1660

1660

1830

1707

(1000 HA) ,(1000 MT)

Production

Aggregate barley production in Japan in 2015 was up 4.2 percent from 2014 to 176,900 MT. For two-row barley, production increased four percent due to a slight increase in the planted area coupled with an improved yield in the Kanto region supported by favorable weather, offsetting a decrease in yield due to excessive rain during planting and growing in the other major growing region, Kyushu. However, the yield in 2015 was five percent lower than the average yield of the last five years. Production of six-row barley increased 12 percent due to an above-average yield, thanks to favorable weather conditions, and a five percent increase in planted area. Production of naked barley decreased 23 percent due to a 22 percent drop in yield from the previous year as a result of excessive rain during planting and growing.

Consumption

Aggregate annual barley (feed and food) consumption is estimated to be stable at approximately 1.3 million MT. Roughly 75 percent is consumed in the feed sector, of which over 80 percent is consumed by beef cattle. About 880,000 MT of feed barley was sold through MAFF SBS tenders during MY2014/15 (October 2014 – September 2015). MAFF sets the import volume of feed barley for each Japanese fiscal year. For JFY2015, MAFF initially set an import volume of 690,000 MT, but with competitively priced feed barley available in Europe, Russia and Black Sea countries, 603,905 MT of feed barley was imported in the first seven months (April - October 2015). To allow more barley to be imported this fiscal year, in November 2015, MAFF raised the import volume for JFY2015 to 1,000,000 MT.

For non-feed use barley, MAFF forecasts consumption of about 330,000 MT in JFY2015, of which 110,000 MT is expected to be supplied domestically and the remaining 220,000 MT to be imported. Two-row barley is used primarily for beer, and Australia is the major supplier. Six-row barley - supplied by domestic production and imports from Canada - is used for making barley tea. Naked barley is used for the production of miso (soybean paste), entirely produced from domestic barley supplies. There is little indication that barley for these non-feed uses will increase in the near future.

Trade

Barley imports decreased 15 percent in MY 2014/15 from the previous year due mainly to weak demand from the feed sector resulting from a decrease in the number of beef cattle. Until MY

2012/13, Australia and Canada had supplied 90 percent of barley to Japan. Australian exports of barley to China have soared in recent years, and Canada also increased barley exports to China to meet its strong demand. In MY2014/15, Japan's imports from Australia and Canada plunged by 59 percent and 42 percent respectively from the previous year due to high CIF prices. Instead, Japan diversified its supply sources, importing feed barley from non-traditional suppliers such as Germany and the United Kingdom and Black Sea countries at competitive prices. If competitively priced feed barley continues to be available, feed barley imports are expected to increase slightly in MY2015/16, while food barley imports are forecast to remain flat.

CIF Price of Feed Barley (USD/MT)

MY2009/10

MY2010/11

MY2011/12

MY2012/13

MY2013/14

MY2014/15

World

208.92

302.26

300.95

326.12

276.88

255.4

Australia

208.77

310.27

298.39

325.7

278.71

280.58

Slovakia

0

0

0

0

0

272.06

Canada

223.83

299.47

308.45

326.09

271.29

267.77

United States

200.67

271.12

342.48

338.74

273.43

260.47

Germany

0

0

0

0

0

251.21

Russia

231.43

0

310.84

0

291.51

247.68

United Kingdom

0

0

0

0

0

242.03

Romania

0

0

0

0

0

240.4

Ukraine

201.74

196.2

0

299.8

300.58

234.32

Hungary

0

0

0

0

0

227.37

Bulgaria

0

0

0

0

0

213.33

Argentina

226.25

0

0

0

0

0

Japan Import Statistics

Commodity: Barley for Feed,

Year Ending: September

Quantity (MT)

% Share

% Change

2012/13

2013/14

2014/15

2013

2014

2015

2015/2014

World

1122019

1052245

895391

100.00

100.00

100.00

- 14.91

Germany

0

0

183164

0.00

0.00

20.46

0.00

Australia

599259

537944

148449

53.41

51.12

16.58

- 72.40

Canada

439971

275057

143031

39.21

26.14

15.97

- 48.00

United Kingdom

0

0

129566

0.00

0.00

14.47

-

Romania

0

0

98927

0.00

0.00

11.05

-

United States

62584

177671

83233

5.58

16.88

9.30

- 53.15

Russia

0

32300

40548

0.00

3.07

4.53

25.54

Ukraine

20205

29273

33316

1.80

2.78

3.72

13.81

Hungary

0

0

32640

0.00

0.00

3.65

-

Slovakia

0

0

1520

0.00

0.00

0.17

-

Bulgaria

0

0

997

0.00

0.00

0.11

-

Japan Import Statistics

Commodity: Barley for Food,

Year Ending: September

Quantity (MT)

% Share

% Change

2013

2014

2015

2013

2014

2015

2015/2014

World

232317

242085

201591

100.00

100.00

100.00

- 16.73

Australia

173668

167992

139675

74.75

69.39

69.29

- 16.86

Canada

56513

68595

55014

24.33

28.34

27.29

- 19.80

United States

2133

5491

3903

0.92

2.27

1.94

- 28.92

France

0

0

1991

0.00

0.00

0.99

-

United Kingdom

3

5

1008

0.00

0.00

0.50

-

China

0

2

0

0.00

0.00

0.00

- 100.00

Japan Import Statistics

Commodity: Barley Total,

Year Ending: September

Quantity (MT)

% Share

% Change

2013

2014

2015

2013

2014

2015

2015/2014

World

1354336

1294330

1096982

100.00

100.00

100.00

- 15.25

Australia

772927

705936

288124

57.07

54.54

26.27

- 59.19

Canada

496484

343652

198045

36.66

26.55

18.05

- 42.37

Germany

0

0

183164

0.00

0.00

16.70

0.00

United Kingdom

3

5

130574

0.00

0.00

11.90

-

Romania

0

0

98927

0.00

0.00

9.02

0.00

United States

64717

183162

87136

4.78

14.15

7.94

- 52.43

Russia

0

32300

40548

0.00

2.50

3.70

25.54

Ukraine

20205

29273

33316

1.49

2.26

3.04

13.81

Hungary

0

0

32640

0.00

0.00

2.98

-

France

0

0

1991

0.00

0.00

0.18

-

Slovakia

0

0

1520

0.00

0.00

0.14

-

Bulgaria

0

0

997

0.00

0.00

0.09

-

China

0

2

0

0.00

0.00

0.00

- 100.00

Sorghum

Sorghum

2013/2014

2014/2015

2015/2016

Market Begin Year

Oct 2013

Oct 2014

May 2015

Japan

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

0

0

0

0

0

0

Beginning Stocks

78

78

81

51

84

24

Production

0

0

0

0

0

0

MY Imports

1003

1003

903

903

1000

950

TY Imports

1003

1003

903

903

1000

950

TY Imp. from U.S.

255

330

75

113

0

0

Total Supply

1081

1081

984

954

1084

974

MY Exports

0

0

0

0

0

0

TY Exports

0

0

0

0

0

0

Feed and Residual

1000

1030

900

930

1000

900

FSI Consumption

0

0

0

0

0

0

Total Consumption

1000

1030

900

930

1000

900

Ending Stocks

81

51

84

24

84

74

Total Distribution

1081

1081

984

954

1084

974

(1000 HA) ,(1000 MT)

Consumption

Almost all sorghum is used for feed, of which 90 percent is consumed by the swine and poultry sectors. Use of sorghum in compound feed adjusts depending on the availability and price of corn and, recently, rice. Swine numbers are expected to recover slightly in 2015 and 2016 from the 2014 reduction in the swine population resulting from the Porcine Epidemic Diarrhea virus (PEDv) outbreak. As production of poultry meat has increased in the last four years, and egg prices were high in 2015, the poultry population is expected to increase slightly in 2015 and 2016. Accordingly, although demand for sorghum for swine and poultry feed is expected to be robust in MY2015/16, increased use of rice in compound feed is expected to counterbalance the impact. Therefore, Post projects use of sorghum will decline slightly to 900,000 MT in MY2015/16.

Trade

Argentina has historically been the major sorghum supplier to Japan, followed by Australia and the United States. In MY 2014/15, because of China's strong demand for sorghum from Australia and the United States, Japan's imports from these countries dropped significantly, and Argentina's market share in Japan increased from 64 percent to 86 percent.

Japan Import Statistics

Commodity: Sorghum Total,

Year Ending: September

Partner Country

Unit

Quantity

% Share

% Change

2013

2014

2015

2013

2014

2015

2015/2014

World

T

1896304

1003114

903216

100.00

100.00

100.00

- 9.96

Argentina

T

1083819

643859

778502

57.15

64.19

86.19

20.91

United States

T

177944

330362

112590

9.38

32.93

12.47

- 65.92

Brazil

T

0

0

9472

0.00

0.00

1.05

-

India

T

1025

1147

1191

0.05

0.11

0.13

3.84

Australia

T

633140

26876

593

33.39

2.68

0.07

- 97.79

Mexico

T

0

0

276

0.00

0.00

0.03

-

Ukraine

T

0

0

264

0.00

0.00

0.03

-

Thailand

T

286

792

242

0.02

0.08

0.03

- 69.44

China

T

88

68

86

0.00

0.01

0.01

26.47

Belgium

T

2

10

0

0.00

0.00

0.00

- 100.00

CIF Price of Sorghum (USD/MT)

MY2012/13

MY2013/14

MY2014/15

World

305.03

270.4

216.31

Argentina

283.22

261.54

207.56

United States

352.65

281.77

272.53

Brazil

0

0

233.59

India

349.19

315.69

311.94

Australia

328.77

335.68

413.05

Thailand

429.76

392.78

403.2

Ukraine

0

0

271.2

China

831.34

806.47

598.25

Mexico

0

0

184.4

Belgium

1124.6

966.71

0