Japan Cutting Corn Imports on Higher Prices

The Japanese continue to keep its corn imports at its lowest levels in 26 years, as high corn prices has resulted in feed producers boosting acquisitions of alternative feeds.

According to Mitsuyoshi Haruno, executive director at the Japan Feed Trade Association, he told Bloomberg that Japan will increase "consumption of wheat, wheat bran and dried distillers’ grains with solubles, or DDGS."

Haruno added that corn imports will be close to the 15.3 million metric tons of 2011.

The Japanese finance ministry said feed wheat imports have surged this year from 62,415 tons last year in the same season to 334,349 tons this year. Of that, the U.S. supplied 198,699 tons, equal to 59 percent of the overall Japanese imports. Australia was the next largest feed wheat exporter to Japan, accounting for 127,807 tons.

Feed wheat imports for Japan this year were set at 764,000 tons, but that could be upwardly revised for the fiscal year.

So far for the year Japan has imported 4.36 million tons of grain for feed, down 3.1 percent from the same period last year. But for corn for all purposes, Japan has imported 6.51 million ton in the first five months of the year ended May 31, or an increase of 0.8 percent over last year.

During the same period the U.S. accounted for 85 percent of Japanese corn imports, which could drop to 80 percent for the year as Japan looks for less expensive options.

Corn Imports From Asia on the Rise

As corn continues to get hammered in the breadbasket of America, where the Midwest continues to be hit by the worst drought in 25 years, the demand for corn in Asian countries is on the rise.

According to Rabobank International, global corn supplies could be strained as China especially may have to up its imports far beyond the 5 million metric tons it imported in 2011-2012. Their estimates are for China to boost corn imports to 8 million tons.

Food & Agriculture Organization, which is an arm of the United Nations, says the amount corn China will import for 2012-2013 will rise from 1 million tons to 6 million tons.

The USDA, which is thought to have understated China's corn demand, only has corn imports at the same 5 million ton levels it stood at last year.

Most of China's rising corn demand is coming from internal farming changes, where small home farms are being replaced by larger commercial farms. The commercial farms include approximately 50 to 55 percent of corn in its cattle feed mix.

Estimates for China are for it to produce about 197.5 million tons of corn for 2012-2013, up from last year's 191.75 million tons.

With diminishing corn yields in America, it's not certain where the corn supply will come from at this time.

Brazil May Be Exporting Corn to U.S.

For several weeks there have been rumors that less expensive Brazil corn may have been bought up by livestock companies in the U.S. as corn prices surge from the ongoing drought, and the need to lock in product before it was acquired by other countries may have pushed the deals forward.

The numbers being thrown around, but which haven't been confirmed yet, are as much as 1 million tons of Brazilian corn may have been acquired for delivery in the latter part of 2012.

A consortium of livestock buyers are behind the corn import rumors, and if true, the deliveries would arrive between October and December in the U.S.

This would be especially attractive to the Southeast portion of the United States, where it's more expensive to buy domestically at this time than it is from Brazil.

That's not only because of the rising price of corn, but the lack of railways to deliver the corn from the Midwest to the Southeast.

At this time the price of Brazilian corn stands at $274 a ton for September shipments. Freight costs are an additional $30 a ton.

Corn delivered within the U.S. is priced at approximately $311 a ton when delivered to the Southeast region of the country.

Concerns in the U.S. remain for corn stocks, which have dropped to 16-year lows, and which the drought could end up hurting if it doesn't end soon.