Japan grain import patterns shift on yen, global supply

Japan this year has increasingly relied on alternative origins for grain imports, moving away from its long-term supplier, the US, as a weaker yen has made the buyer more price-sensitive. Harvest and logistical woes in the US, paired with a bumper production in Australia, have further supported the shift.

Australia became Japan's top wheat supplier in November — for the first time on a monthly basis since at least 2012 — with receipts from the country totalling 141,000t, according to preliminary customs data. Meanwhile, imports from the US and Canada fell both on the month and on the year to 126,000t and 47,000t, respectively.

And receipts from Australia have remained robust for most of this year, with overall imports from the country now standing at 1.17mn t, also their highest in at least 10 years. But this is still behind flows from the US and Canada, which totalled 2.17mn t and 1.61mn t, respectively, so far this year.

Japan's receipts of wheat and other grains have been broadly stable in the past years, both in terms of origins and volumes, with the buyer not showing as much price sensibility as other key importers in east or southeast Asia.

But the yen has seen sharp losses for most of this year, falling in late October to its weakest against the US dollar since 1990. The current rate — $1:¥133 — is still a fresh low since 1998, excluding levels from earlier this year.

This has prompted Japan to adopt a broader look at global wheat, corn and barley flows at a time when dollar-denominated grain prices and freight rates have already risen to multi-year highs amid an inflationary context and partly because of the Russia-Ukraine conflict.

Flows from Australia were further aided by the nation's bumper harvest, which reached a record 36.35mn t in 2021-22 and is expected to hit a fresh high of 36.57mn t this season. Australian wheat exports reached a record of 27.48mn t globally in 2021-22, including preliminary line-up data for October-November, and are forecast at 27.4mn for 2022-23, under Australian Bureau of Agricultural and Resource Economics and Sciences estimates.

Meanwhile, the US harvested some of its smallest wheat crops on record for two years running, with production totalling just 44.8mn t and 44.9mn t in 2021-22 and 2022-23, respectively. But in 2017-18, when the US had another year of poor production at 47.38mn t, Japan's wheat imports from the origin were unaffected at the time and in fact remained above levels from 2015-16.

Corn, barley

Japan's imports of corn from the US have also seen rapid declines, totalling 372,500t in November, a new low for the month. Meanwhile, the country emerged as the largest buyer of Brazilian corn globally — about 856,000t of the 6.06mn t of corn exported from Brazil last month were destined for Japan.

In addition to uncompetitive prices globally, US corn was further adversely affected by low river levels on the Mississippi river, which weighed on grain shipments from the US Gulf region for much of the autumn. Japan's corn imports from the US were also low in October, at 320,000t, less than half of the receipts from Brazil at the time.

As for barley, Australia remained the top supplier in both November and earlier in this year, but cumulative volumes from the origin have risen to 1.08mn t so far this year, a record for the period.

Japan's barley imports from Canada have failed to pick up despite the latter having harvested a much stronger crop in 2022-23 than a year earlier, with the buyer having opted for the more competitively priced Australian product.

By Bilal Muftuoglu