BLBG:Corn Purchases From Europe by Japan Double as Weak Currencies Boost Appeal
Japan, the world’s largest corn buyer, doubled grain purchases from Europe in the past two months, heading for a record volume from the region this year, as local feed mills seek cheaper alternatives to U.S. supply.
Corn purchases by Japanese trading companies from the Black Sea region including Ukraine, Romania and Hungary topped 1.5 million metric tons for shipments from November to March, said Nobuyuki Chino, president of Continental Rice Corp. in Tokyo. Imports may increase further unless corn from Argentina and Brazil, which normally compete with U.S. grain for sales to the Asian market, becomes cheaper, he said in an interview.
Reduced shipments from the U.S. may curb a recovery in Chicago prices, which have rebounded 13 percent from the lowest level in more than two months on Dec. 15. Japan, which sourced almost 90 percent of its corn in 2010 from the U.S., the biggest exporter, is diversifying supply sources after a drought last year hurt the American crop and drove annual prices to an all- time high.
“European shippers offered corn to Japanese buyers at prices more than $20 a ton cheaper than the U.S. They are taking advantage of depreciating currencies against the U.S. dollar,” said Kazuhiko Saito, an analyst at commodity broker Fujitomi Co in Tokyo.
Chino, who has traded grains for three decades and worked for Continental Grain Co. of the U.S. before establishing his company in 1999, declined to identify the Japanese trading houses as the information is not public. The companies bought 800,000 tons of corn from Ukraine by November after the European nation removed a tax on exports in October.
Euro Slump
European corn became more competitive against U.S. grains as their currencies slumped amid the region’s debt crisis. European corn imports by Japan exceeding 1.5 million tons would be the most ever, according to an official at the Japan Feed Trade Association who declined to be identified as they are not authorized to speak to the media.
The euro was 0.4 percent from a 16-month low against the dollar on speculation European Central Bank policy makers meeting today won’t take steps to support growth even as reports signal a struggling euro-area recovery. The euro traded at $1.2722 as of 1:14 p.m. in Tokyo from $1.2707 yesterday in New York, when it slid to as low as $1.2662, the weakest level since September 2010.
Japan’s livestock industry is increasing efforts to cut raw-material costs as it struggles to recover from the March 11 earthquake and Fukushima nuclear disaster, which destroyed feed plants and tainted beef and milk with radioactive cesium.
Corn futures for March delivery climbed 0.3 percent to $6.5325 a bushel on the Chicago Board of Trade at 1:16 p.m. Tokyo time. Corn, which gained 2.8 percent last year, is used mostly to make livestock feed and ethanol.
To contact the reporter on this story: Aya Takada in Tokyo atakada2@bloomberg.net
To contact the editor responsible for this story: Richard Dobson at rdobson4@bloomberg.net
