Report Highlights:

Overall feed production in Japan continues to be stable, but is gradually trending down and is expected to be below 24 million metric tons in MY2014/15. While corn utilization in feed remains stable at around 44.5 percent in MY 2014/15, the use of rice and DDGS has increased notably.

Overall Market Situation

As shown in the table below, the stagnant trend in the livestock population continues, and feed demand is expected to decline slowly but steadily in the coming years.

Japan's Livestock and Poultry Population (Unit: 1,000 head)

2000

2010

2011

2012

2013

2014

2015

Dairy cows

1,764

1,484

1,467

1,449

1,423

1,395

1,371

Beef cattle

2,824

2,892

2,763

2,723

2,642

2,567

2,489

Swine

9,806

9,750

9,768

9,735

9,685

9,537

9,525**

Layers***

187,382

NA

178,546

177,607

174,784

174,806

174,800**

Broilers

108,410

NA

NA

NA

*131,600

135,747

136,500**

Source: MAFF (as of February each year)

** FAS/Tokyo forecast

*** Layers includes chicks

* MAFF resumed its official survey in 2013. The results cannot be directly compared to previous surveys, however, due to a change in survey methodology.

Up-to-date feed production statistics and a detailed breakdown of feed ingredient utilization follow. As corn has been the largest ingredient in feed, Feed Utilization by Ingredient, has been revised to reflect the corn marketing year of October/September.

Due to the decreased size of the domestic livestock population, Japanese feed production (compound and mixed feed) dipped below the 24 million metric ton (MT) level in MY2013/14 for the first time since MY2004/05. At the current pace, feed production in MY2014/15 is expected to remain at a similar level, i.e., slightly below 24 million MT. With the Ministry of Agriculture, Forestry and Fisheries (MAFF)'s strong push to use rice for feed, rice utilization in feed has increased to around five percent in recent months, at the expense of corn and wheat.

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. During the fourth quarter (January – March 2015) of Japanese Fiscal Year (JFY) 2014 (April 2014 – March 2015), the average price of imported raw materials for compound feed increased by 812 yen per metric ton - from 33,199 yen/MT to 34,011 yen/MT.

Because of this gap, an 800 yen/MT differential was paid as compensation, consistent with the amount paid in the previous fiscal year's third quarter. During these third and fourth quarters, prices of the key feed ingredients such as corn and soy meal were lower at the Chicago Board of Trade than the prices during the same period of the previous years. Notwithstanding that situation, import prices in Japan for those commodities rose in yen terms due to the depreciation of the yen against the dollar by about 15 percent over that timeframe.

Production, Supply and Distribution Estimates for Japan, Corn

Corn

2013/2014

2014/2015

2015/2016

Market Begin Year

Oct 2013

Oct 2014

May 2016

Japan

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

1

1

1

1

1

1

Beginning Stocks

523

523

545

442

546

443

Production

1

1

1

1

1

1

MY Imports

15121

15118

15000

15000

15000

14800

TY Imports

15121

15118

15000

15000

15000

14800

TY Imp. from U.S.

12337

11016

0

0

0

0

Total Supply

15645

15642

15546

15443

15547

15244

MY Exports

0

0

0

0

0

0

TY Exports

0

0

0

0

0

0

Feed and Residual

10600

10800

10500

10700

10500

10500

FSI Consumption

4500

4400

4500

4300

4500

4300

Total Consumption

15100

15200

15000

15000

15000

14800

Ending Stocks

545

442

546

443

547

444

Total Distribution

15645

15642

15546

15443

15547

15244

(1000 HA) ,(1000 MT)

Of the total demand for corn in Japan, roughly 75 percent comes from the feed sector, and 25 percent comes from the food sector, mainly from starch manufacturers. Despite the decline in utilization over recent years, corn continues to be the largest ingredient in compound feed in Japan, but as noted above, expansion of rice utilization in feed rations, as a result of MAFF subsidy incentives, is expected to result in a slightly lower corn consumption level for feed in MY2014/15; this downward trend is forecast to continue for MY2015/16. Starch production is expected to be stable but a slightly lower demand from the soft drink production sector is anticipated, reflecting a demographic shift in preferences in MY2014/15 and MY2015/16. Accordingly Post's estimate for feed and FSI consumption and imports has been slightly lowered in MY2014/15 and MY2015/ in the revised PS&D.

Between November 2014 and March 2015, as a result of abundant supplies, Brazil increased its feed corn exports to Japan, taking some market share from U.S. feed corn in the Japanese market. The subsequent recovery in supply in the United States has contributed to a recovery in U.S. import market share in Japan to over 90 percent in the April and May 2015 timeframes.

Japan - Total Imports of Corn (excluding corn for seeds)

Partner Country

Unit

MY 2011/12

MY 2012/13

MY 2013/14

Oct 2014 - May 2015

Share

World

MT

14885469

14409591

15118226

9680346

100.0%

United States

MT

12079272

6932378

11015899

7931927

81.9%

Brazil

MT

843358

4621090

2195239

1318242

13.6%

Ukraine

MT

960753

351526

1219746

191357

2.0%

Argentina

MT

586096

1756484

301150

72802

0.8%

South Africa

MT

10276

617566

171870

141829

1.5%

Other

MT

405714

130547

214322

24189

0.2%