Highlights

Given the competitiveness of U.S. corn, wheat, and rice prices, Japanese demand for these grains has remained strong. However, exports from Pacific Northwest ports in the United States were slowed during the winter of 2016-2017 due to severe weather which led to corn and wheat supply shortages in Japan in early 2017. To meet the shortage, Japan used some emergency reserves of corn and wheat, and reportedly imported limited volumes of corn from China. Despite the temporary supply chain disruption, Japanese feed production is expected to remain stable. Additionally, as a result of favorable weather conditions, Japanese rice production increased to 7.8 million MT in MY2016/17.

Feed Production

As a result of declining livestock inventories, Japanese compound feed production has remained below the 24 million MT mark since MY2013/14. As the number of aging farmers exiting from the livestock industry exceeds the number of new entrants, livestock inventories across Japan are gradually trending down. For MY2016/17, the decline in the total livestock inventory is expected to be minimal, and thus feed production is expected to remain relatively flat. Nevertheless, livestock inventories and feed production are forecast to resume their gradual decline in MY2017/18.Japan maintains a feed price stabilization program that consists of a combination of: 1) a Ministry of Agriculture, Forestry and Fisheries (MAFF) subsidy and 2) an industry fund to help absorb surges in compound feed prices. The program 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 have been made since the first quarter of Japanese fiscal year (JFY) 2015 (April – March). However, as a result of increased freight costs and depreciation of the Japanese yen between October- December 2016, feed millers increased compound feed prices between January – March 2017 by approximately three percent. Further price increases could lead to compensation payments for the first time in years.

Corn

Corn

Market Begin Year

Japan

2015/2016

2016/2017

2017/2018

Oct 2015

Oct 2016

Oct 2017

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

1

1

1

1

0

1

Beginning Stocks

1348

1348

1343

1351

0

1252

Production

1

1

1

1

0

1

MY Imports

15194

15202

15000

15100

0

15000

TY Imports

15194

15202

15000

15100

0

15000

TY Imp. from U.S.

11227

10586

0

0

0

0

Total Supply

16543

16551

16344

16452

0

16253

MY Exports

0

0

0

0

0

0

TY Exports

0

0

0

0

0

0

Feed and Residual

11600

11600

11500

11600

0

11500

FSI Consumption

3600

3600

3600

3600

0

3600

Total Consumption

15200

15200

15100

15200

0

15100

Ending Stocks

1343

1351

1244

1252

0

1153

Total Distribution

16543

16551

16344

16452

0

16253


Production

Japanese corn production is negligible. There has been some effort made to pursue corn production in Hokkaido, but this production remains incredibly limited.

Trade

Competitive corn prices encouraged feed millers to increase corn utilization in feed production, which resulted in a four percent increase in the total corn import volume in MY2015/16. Japanese feed millers also diversified their import sources, and, due to the competitive price of Brazilian feed corn when compared to U.S. corn, Brazil increased its share of imports to nearly 30 percent in MY2015/16.

In the winter of 2016/17, severe weather (snow and floods) hampered inland transportation of grains to export ports in the U.S. Pacific Northwest (PNW), particularly grains transiting via rail. This led to delays in corn exports from PNW ports to Japan. After the loading of Brazilian corn in December, Japan normally switches imports from the Southern Hemisphere to the United States until the next Brazilian crop enters the market. Due to export delays from the PNW ports, however, Japan was not able to import the volume of corn feed millers needed (NOTE: the Japanese corn shortage is expected to be at its peak in March). Industry sources have reported that many Japanese trading firms earlier opted to export corn from the PNW rather than the Gulf this past winter (given price advantages), which exacerbated the situation in Japan. In response, MAFF approved the use of 340,000 MT of feed corn from the emergency reserve. Trading firms have also been seeking other import sources to supply corn to Japan in March. However, there are few countries from where corn can be transported quickly to Japan apart from China (where shipments arrive in Japan within three to four days). With industry expectations that PNW trade will normalize in the near term, Japanese trading firms reportedly purchased a small volume of Chinese corn to temporarily buttress against the shortage. Industry sources have noted that MY2016/17 feed corn imports are expected to be at similar levels to MY2015/16 based on import purchase contracts that have already been signed. With a stable supply of food corn imports, total corn imports are expected at 15.1 million MT in MY2016/17. Due to the projected decline in feed consumption, however, total corn import volumes are forecast to decline slightly to 15 million MT in MY2017/18.

Consumption

As a result of the abundant world corn supply, the price of imported corn in Japan fell roughly 10 percent in MY2015/16 from the previous year. Japanese feed millers took advantage of the price to increase corn utilization in compound feed by one percent (up 340,000 MT to 10.9 million MT), which cut into sorghum’s share of the feed recipe. Together with nearly 300,000 MT of on-farm feed corn, the total feed and residual consumption is estimated at 11.6 million MT in MY2015/16. For MY2016/17, with an expectation of continued competitive prices, feed demand for corn is forecast to remain strong, and industry sources report MY2016/17 corn for feed consumption is expected to be at similar levels to MY2015/16. To address the corn supply shortage resulting from problematic weather in the U.S. PNW in early 2017, feed millers changed their compound feed formula slightly (but not to a level that would require changes to the labeling of ingredients). However, as the backlog of corn is expected to be resolved, no significant long-term change to the composition of compound feed is expected. Accordingly, MY2016/17 feed consumption is forecast to remain unchanged at 11.6 million MT. However, with a slow decline in feed production anticipated, corn consumption for feed is projected to decrease slightly in MY2017/18 (to 11.5 million MT). The driving force for food corn demand comes from the beverage sector, particularly for high fructose corn syrup (HFCS). MAFF estimates that the demand for corn starch will remain unchanged for MY2016/17. The consumption for corn is expected to remain flat at 3.6 million MT in MY2016/17. FSI consumption is also forecast to remain unchanged in MY2017/18.

Stocks

As Japan heavily relies on imports of feed ingredients, the GOJ operates a contingency program to maintain 1.2 million MT of feed ingredient reserves -- 850,000 MT for corn, sorghum, wheat, barley, bran and soybean meal, and 350,000 MT for rice. The GOJ subsidizes the storage costs for the reserve that the private sector holds for this purpose. Corn is believed to account for the majority of the 850,000 MT reserve, and, together with the regular stocks at feed mills, roughly 1.2 million MT of corn is estimated to be held in stocks at the end of MY2016/17. The level of corn reserve is estimated to fall to approximately 500,000 MT (by the end of February 2017) as roughly 340,000 MT was released to feed millers after delays in shipments resulting from winter weather in the U.S. PNW. This is the largest amount of reserves released since the Great Eastern Earthquake of 2011(when 750,000 MT was released). However, industry sources continue to believe that stocks will return to 1.2 million MT by the end of MY2016/17 (NOTE: the rice reserve of 350,000 MT remains untapped). With the continuation of the GOJ’s reserve program for JFY2017, similar stocks are anticipated for MY2017/18.

Market Begin Year

Japan

2015/2016

2016/2017

2017/2018

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

0

0

0

0

0

0

Beginning Stocks

24

52

23

52

0

52

Production

0

0

0

0

0

0

MY Imports

650

650

700

600

0

570

TY Imports

649

650

700

600

0

570

TY Imp. from U.S.

82

73

0

0

0

0

Total Supply

674

702

723

652

0

622

MY Export

0

0

0

0

0

0

TY Exports

0

0

0

0

0

0

Feed and Residual

651

650

700

600

0

580

FSI Consumption

0

0

0

0

0

0

Total Consumption

651

650

700

600

0

580

Ending Stocks

23

52

23

52

0

42

Total Distribution

674

702

723

652

0

622

Production

Production of sorghum is negligible in Japan.

Consumption

Nearly all imported sorghum is consumed as feed in Japan, and it is mainly utilized as a substitute for corn in compound feed. The utilization of sorghum depends on its price relative to corn and rice as feed millers reportedly prefer corn when prices are equivalent. In MY2015/16, sorghum used in compound feed decreased 250,000 MT to 650,000 MT and its utilization ratio continued to decline to a record low of 2.9 percent (as the price of feed corn and sorghum were nearly equivalent). Sorghum use for compound feed is expected to continue trending down provided the price of feed corn and sorghum remains at current levels and rice used for feed slightly increases. Accordingly, feed and residual consumption of sorghum is forecast to decrease to 600,000 MT in MY2015/16 and 580,000 MT in MY2017/18.

Trade

As almost all imported sorghum is consumed as feed, the 250,000 MT decrease in imports in MY2015/16 is attributable to the decline in feed consumption. Imports are forecast to further decrease in MY2016/17 (600,000 MT) and MY2017/18 (570,000 MT) in accordance with the expected reduction for feed consumption.

Stocks

Sorghum is part of the GOJ’s regular contingency reserve program. However, as corn is believed to account for the lion's share of the reserve, sorghum stocks for this program are considered to be negligible.

Barley

2015/2016

2016/2017

2017/2018

Market Begin Year

Japan

Oct 2015

Oct 2016

Oct 2017

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

61

61

61

61

0

61

Beginning Stocks

360

360

351

332

0

294

Production

177

177

166

172

0

172

MY Imports

1154

1155

1100

1150

0

1100

TY Imports

1154

1155

1100

1150

0

1100

TY Imp. from U.S.

7

6

0

0

0

0

Total Supply

1691

1692

1617

1654

0

1566

MY Exports

0

0

0

0

0

0

TY Exports

0

0

0

0

0

0

Feed and Residual

980

980

930

980

0

950

FSI Consumption

360

380

380

380

0

380

Total Consumption

1340

1360

1310

1360

0

1330

Ending Stocks

351

332

307

294

0

236

Total Distribution

1691

1692

1617

1654

0

1566

To reduce table rice production, the GOJ has been subsidizing wheat, barley, soybeans, feed crops, rice for whole crop silage, and feed and flour produced in rice paddies. A subsidy of 35,000 yen (roughly US$307) per 10 Are is provided to support barley production in rice paddies. In addition, the GOJ provides income stabilization subsidy payments to barley produced in both rice paddies and dry fields to compensate for the difference between production cost and sales price. The unit subsidy payment is revised every three years, and the average unit subsidy payment for two-row barley, six-row barley, and naked barley for JFY2017-JFY2019 will increase from the most recent three year period predominantly due to decreases in sales prices and yields. Having been supported by these subsidy payments, over 90 percent of barley is planted on rice paddies, with the remaining 10 percent grown on dry fields. The total planting area for barley has remained stable over the last decade. For the MY2016/17 crop, total barley production decreased three percent to 171,700 MT while the planted area remained unchanged from MY2015/16 levels. The decrease in production is mainly attributable to an eight percent decrease in the yield of two-row barley due to unfavorable weather conditions. Planted area and production are forecast to remain unchanged in MY2017/18.

Consumption

The utilization of barley in compound feed remained unchanged in MY2015/16 from the previous year (at 800,000 MT), with over 90 percent of barley being consumed by cattle (80 percent by beef cattle). Together with roughly 100,000 MT of on-farm feed barley, the total feed and residual consumption is estimated at 980,000 MT in MY2015/16. Feed and residual consumption is expected to remain unchanged in MY2016/17 as beef cattle inventories are expected to remain flat. However, with a gradual decline in total livestock inventories expected, feed and residual consumption is forecast to decrease slightly to 950,000 MT in MY2017/18.

Food, seed and industrial (FSI) consumption is estimated at 380,000 MT in MY2015/16. Approximately 230,000 MT of imported barley and 150,000 MT of domestically produced barley are used to produce beer and Shoshu (Japanese spirits) from domestic, Australian, and Canadian two-row barley, and barley tea and rolled barley from domestic, Canadian and U.S. six-row barley. Domestic naked barley is used to make miso bean paste. As there is little indication of any changes anticipated in the production of these goods, FSI consumption is anticipated to remain unchanged in MY2016/17 and MY 2017/18.

Trade

Barley is imported under the Simultaneous-Buy-Sell (SBS) tender system operated by MAFF. SBS tenders are operated for food barley and beer barley in bulk shipments (a Category I Import) and container shipments (a Category II Import), and for feed barley in bulk shipments. As a result of the 2015 Japan-Australia Economic Partnership Agreement, imports of Australian feed barley have been liberalized meaning Australian feed barley is imported outside of the SBS system. The price of feed barley dropped 20 percent in MY2015/16 from the previous year and, due to its price competitiveness, Australia’s feed barley increased its import market share to 61 percent. Australia continued to be the main supplier of feed barley to Japan in MY2016/17. Therefore, the amount contracted under the SBS feed barley tender system has decreased significantly in JFY2016. Total barley imports are expected to remain unchanged at 1.15 million MT in MY16/17, based on the expectation that barley consumption remains stable for both feed and food. Given a slight decrease in feed consumption, however, total barley imports are forecast to decline to 1.1 million MT in MY2017/18.

Stocks

The GOJ does not hold barley for contingency reserves.

Rice

Rice, Milled

Market Begin Year

Japan

2015/2016

2016/2017

2017/2018

Nov 2015

Nov 2016

Nov 2017

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

1586

1586

1570

1570

0

1560

Beginning Stocks

2821

2821

2622

2532

0

2387

Milled Production

7670

7670

7790

7780

0

7600

Rough Production

10536

10536

10701

10687

0

10440

Milling Rate (.9999)

7280

7280

7280

7280

0

7280

MY Imports

711

711

685

700

0

700

TY Imports

685

686

685

700

0

700

TY Imp. from U.S.

343

343

0

0

0

0

Total Supply

11202

11202

11097

11012

0

10687

MY Exports

80

70

85

75

0

80

TY Exports

75

70

80

75

0

80

Consumption and Residual

8500

8600

8500

8550

0

8500

Ending Stocks

2622

2532

2512

2387

0

2107

Total Distribution

11202

11202

11097

11012

0

10687

Overall market situation

In Japan, farmers make their rice planting decisions for the coming season based on the amount of stocks held privately as of June of each year (the future crop’s price is anticipated to increase if June stocks fall below 1.82 million MT). Because of sluggish consumption in Japan, rice stocks exceeded two million MT in June 2013, 2014 and 2015. In 2015, in an effort to reduce excessive stocks, MAFF encouraged rice farmers to convert from table rice to feed rice, by providing subsidies for feed rice production (ensuring income is equal to or higher than income from producing table rice. As a result, feed rice production more than doubled in 2015 while table rice production decreased by 400,000 MT. Additionally, as a result of anticipated stock reductions, the price of the MY2015/16 rice crop rose 10 percent over MY2014/15 levels. The promotion of feed rice production also led to a lowering of stocks in June 2016 (to 1.86 million MT from 2.06 million MT in June 2015).

In MY2016/17, production further shifted from table rice to feed rice production. As a result, MY2016/17 table rice stocks were expected to decrease while prices increased. Government support for shifting production from table rice to feed rice is expected to continue in an effort to reduce table rice stocks to an “appropriate” (according to MAFF) level of 1.64 million MT in June 2018 (prior to the abolishment of the rice acreage reduction program in 2018 for table rice production).

Production

As previously noted, MAFF continued to incentivize feed rice production in MY2016/17. As a result, the planted area for feed rice increased by 11,000 ha while the planted area for rice other than feed rice (table rice, rice for processing, etc) fell 27,000 ha. As a result, the total planted area for rice in Japan decreased 16,000 ha. Despite the decline in the planted area, given favorable weather conditions throughout the production season, Japanese rice yields increased 0.1 MT/ha to 4.9 MT/ha (0.1 MT/ha higher than the average yield of recent years).

In MY2016/17, production of rice other than feed rice increased 55,000 MT to 7.32 million MT (of which 6.8 million MT was table rice production, a 53,000 MT increase from the previous year). While MAFF has yet to finalize MY2016/17 production data for feed rice, production is estimated at 460,000 MT (assuming a higher yield than table rice yields given the planting of high yield varieties for more than half of the feed rice produced). Accordingly, total rice production is estimated to increase 1.1 percent to 7.78 million MT in MY2016/17.

For MY2017/18, because the GOJ continues to subsidize feed rice production, the planted area and production volume for feed rice is expected to increase, but not to a level high enough to offset the anticipated reduction in table rice production. Accordingly, the total rice planted area is forecast to decline to 1.56 million ha and production is forecast to decrease to 7.6 million MT (assuming average yields of recent years of 4.8 MT/ha).

As feed rice is sold at a price equivalent to feed corn, the sales revenue for feed rice is less than 10 percent of the sales revenue for table rice. Nevertheless, the subsidy for feed rice is set to ensure income levels for feed rice are at least equivalent to income levels for producing table rice. In fact, the subsidy reportedly accounts for more than 90 percent of the income of feed rice. MAFF has set a goal to increase feed rice production to one million MT by 2025 under the 2015 Basic Plan for Food, Agriculture and Agricultural Villa.The JFY 2016 budget earmarked 67.6 billion yen (US$588 million) for feed rice subsidies, and the Ministry of Finance estimates the budget for feed rice subsidies will have to increase to 116 billion yen (slightly more than US$1 billion) if feed rice production were to increase to one million MT (brown). As the feed rice subsidy is a non-permanent budgetary measure, it is not certain if Japan will provide enough subsidies to increase feed rice production to the stated goal.

Consumption

Table rice consumption has been trending downward at a rate of approximately 72,800 MT per year due to the decline in population and per-capita consumption. Per-capita consumption of table rice fell one kilogram to 54.6 kilogram (brown) in JFY2015 from the previous year. Following a 10 percent price increase in MY2015/16, the price of the MY2016/17 crop further rose 8.4 percent (as of January 2017) as a result of decreasing production and an anticipated reduction in stocks the following June. MAFF estimates table rice demand for 2015/16 (July 2015 – June 2016) to be 6.97 million MT, and forecasts that table rice demand will decline to 6.86 million MT for 2016/17 (July 2016 – June 2017) due to an increase in price resulting from an anticipated reduction in stocks. Moreover, table rice consumption is forecast to decline further in MY2017/18.

More people are eating out in Japan and purchasing ready-to-eat foods given the convenience. As a result, rice consumption by the food service industry (restaurants and home-meal replacement manufacturers) has been increasing while consumption of rice cooked at home is on the decline. In MY2015/16 (July 2015 – June 2016), MAFF estimates 63 percent of table rice was consumed at home, and that the food service industry accounted for the remaining 37 percent. It is anticipated that the proportion attributable to the food service industry will increase further in MY2016/17 and beyond. Demand for rice for processing (rice snacks, sake, miso and other) has been stable which is estimated at around 640,000 MT for MY2015/16, and the demand is forecast to remain unchanged for MY2016/17 and MY2017/18.

Rice used in compound feed increased by only 13,000 MT to 1.09 million MT in MY2015/16. With approximately 130,000 MT of on-farm rice used as feed, the total rice used for feed is estimated at 1.23 million MT in MY2015/16. A further significant growth of rice for feed consumption is unlikely as an increase in feed rice production is expected to be limited due to budgetary limitations for subsidies. Accordingly, rice consumption for feed is forecast to increase marginally in MY2016/17 and MY2017/18.

The aggregate rice consumption for Japan is estimated at 8.6 million MT in MY2015/16, and is forecast to decline to 8.5 million MT in MY2017/18 (as a marginal increase in rice for feed consumption is not anticipated to offset the decline in table rice consumption).

Trade

As of March 15, 2017, tweleve Ordinary Minimum Access (OMA) tenders were held in JFY2016 where 552,679 MT of rice (actual tonnage) was successfully bid. With the completion of the SBS tenders for JFY2016, a total of 73,314 MT (actual tonnage) was successfully bid. In fact, given competitive international prices for rice coupled with the price increases seen for domestic table rice, demand for SBS rice was robust. Given the difficulty in purchasing less expensive domestic rice, the Japanese food service industry sought to procure competitively priced imported rice. SBS tenders were suspended in October and November 2016 following media allegations that importers and wholesalers were exchanging “adjustment money” to encourage SBS imports which, in turn, allegedly placed downward pressure on Japanese domestic rice prices. After a MAFF-led investigation was held and found that imports were not suppressing domestic rice prices, the SBS tender system was resumed on December 16, 2016. As a condition for the resumption of trade, MAFF expressly prohibited the exchange of “adjustment monies” moving forward.

In an effort to refocus Japanese agricultural production, the GOJ has been promoting agricultural exports, including rice. While it is still small in volume, rice exports have gradually increased in recent years and are expected to continue their gradual (albeit limited) growth in the coming years. In addition to commercial exports, Japan exports rice for food aid using minimum access (MA) rice (i.e., both OMA and SBS rice) as shown in table 24. FAS/Tokyo believes that Japan’s total rice exports were larger than reported by trade statistics (given that food aid is not always reported in the data).

Stocks

The GOJ held 828,100 MT of rice in reserve and 690,000MT (actual tonnage) of MA rice stocks (actual tonnage) at the end of October 2016, of which 350,000 MT (actual tonnage) of MA rice was set aside as for the emergency feed grain reserve.

As a result of decreasing production, MAFF estimates private sector stocks fell by 220,000 MT in June 2016, and that they will fall another 40,000 MT in June 2017. If the volume of table rice production continues to fall in 2017 (to 6.7 million MT), MAFF forecasts that stocks will decline another 200,000 MT to 1.64 million MT in June 2018 (a level MAFF considers appropriate).

Wheat

Wheat

Market Begin Year

Japan

2015/2016

2016/2017

2017/2018

Jul 2015

Jul 2016

Jul 2017

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

213

213

214

214

0

214

Beginning Stocks

1227

1227

1288

1288

0

1196

Production

1004

1004

760

778

0

820

MY Imports

5715

5715

5800

5900

0

5850

TY Imports

5715

5715

5800

5900

0

5850

TY Imp. from U.S.

2592

2531

0

0

0

0

Total Supply

7946

7946

7848

7966

0

7866

MY Exports

258

258

270

270

0

260

TY Exports

258

258

270

270

0

260

Feed and Residual

500

600

550

700

0

600

FSI Consumption

5900

5800

5900

5800

0

5800

Total Consumption

6400

6400

6450

6500

0

6400

Ending Stocks

1288

1288

1128

1196

0

1206

Total Distribution

7946

7946

7848

7966

0

7866

Production

Despite a 1,300 ha increase in Japan’s planted area, total wheat production decreased 23 percent to 777,900 MT in MY2016/17 due to unfavorable weather conditions, particularly in Hokkaido where 65 percent of Japan’s wheat is produced. Unstable weather inhibited grain filling and heavy rain delayed the harvest which negatively impacted the quality of the grain. As a result, the yield in Hokkaido declined from record levels in MY2015/16 (6.0 MT/ha) to 4.2 MT/ha. As a result, production decreased by 217,200 MT to 513,700 MT. Production in the remaining prefectures declined three percent as high temperatures cut short the grain filling period.

Over the last decade, the wheat planted area has shown negligible growth, and the GOJ’s subsidy payments have prevented a decline in the planting area. In an effort to shift production from table rice to other crops, the GOJ is providing 35,000 yen per 10 are of wheat produced on rice paddies. In MY2016/17, the wheat planted area on rice paddies increased 1,900 ha to 117,000 ha, offsetting a 600 ha decline in wheat planted area on dry field. Consequently, the total planted area increased 1,300 ha to 214,400 ha. In addition, the GOJ provided income stabilization subsidy payments to wheat produced in both rice paddies and dry fields to compensate for the difference between production costs and sales.

Consumption

Contrary to table rice consumption, per-capita wheat consumption increased four percent over the last decade to 33 kilogram in JFY2015. Food wheat consumption is expected to remain strong at 5.8 million MT for MY2016/17, and is forecast to remain unchanged in MY2017/18.

Wheat and wheat flour are minor ingredients in compound feed and their composition ratios were approximately 1.6 percent and 0.8 percent, respectively, in MY2015/16. The total quantity of wheat for feed (which includes wheat and wheat-equivalent wheat flour used in compound feed and on-farm feed) is estimated at 600,000 MY in MY2015/16. With the availability of competitively priced wheat from Black Sea countries, the price of feed wheat has become competitive with feed corn and feed sorghum, and demand for feed wheat has been strong. Between July and December 2016, the composition ratio of wheat in compound feed increased 0.3 percent to 1.9 percent which translates to an increase of approximately 70,000 MT.

Also, as mentioned above, the quality of the MY2016/17 domestic crop was impacted by weather which resulted in a higher proportion of off-grade wheat, some of which is expected to be used for feed (both wheat and wheat flour). Consequently, total wheat for feed consumption is expected to increase to 700,000 MT in MY2016/17. However, wheat for feed consumption is forecast to decline to 600,000 MT in MY2017/18 in accordance with an expectation of average quality of domestic wheat (leading to significantly less wheat for feed than was available from the MY2016/17 crop) and, a projected decrease in compound feed production.

Trade

As a State Trading Enterprise, MAFF controls wheat imports under three different systems: 1) Direct Purchase of Food Wheat, 2) SBS Imports of Food Wheat, and 3) SBS Imports of Feed Wheat.

Stocks

As a contingency plan, the private sector holds a total of 940,000 MT of imported wheat, equivalent to 2.3 months of demand in reserve, for which the GOJ subsidizes the storage costs for the amount equivalent to 1.8 months demand. In response to the delay in imports from the U.S. PNW, flour millers have used some of those reserves which has led to a decline in reserves (below 900,000 MT at the end of January 2017). Once trade is normalized, reserve levels are expected to return to normal levels (1.2 million MT).