February 3, 2011 / 10:03 AM / in 7 years

Canada offers wheat, Japan buys as planned

TOKYO (Reuters) - Japan has bought from Canada the planned amount of food wheat it was seeking at a regular tender which closed on Thursday, after failing to find other sellers last week.

The Canadian Wheat Board said on Wednesday it has offered to fill Japan’s tender this week with wheat containing a protein level of 13.5 percent, and Japanese traders and industry sources said earlier on Thursday the ministry was expected to take the offer.

Japan’s Ministry of Agriculture has bought a total of 183,640 tonnes of food wheat from the United States, Canada and Australia as planned. The purchase from Canada was 37,110 tonnes, for shipping March 12 to April 11.

Japan found no sellers for its planned purchase of the same volume of wheat last week, and CWB said it only had spring wheat available with between 13 and 13.3 percent protein, so it did not fill the tender pending discussions with Japan’s agriculture ministry.

“We buy wheat under our guidelines, and we buy wheat from Canada if it contains protein above 13.3 percent,” a Japanese farm ministry official said.

The Japanese government keeps a firm grip on wheat imports and holds strict quality standards given the demand from Japanese end-users for high-quality grains.

Supplies of high-quality wheat have tightened globally due to irregular weather at key producing countries such as Canada and Australia and raised concerns about future procurement if weather disruptions continue to deplete supplies of high-quality wheat for bread use preferred by Japanese end-users.

“Within the guidelines, we are responding flexibly. There haven’t been cases which diverted greatly from the guidelines, so we are watching the situation but there is no specific plan to do anything at this point,” the farm ministry official said.

The Japanese government keeps a firm grip on wheat imports, buying about 5 million tonnes of foreign wheat a year for milling use, which accounts for about 90 percent of domestic consumption.

So far Japan, Canada’s fourth-largest wheat export market, has not changed the protein level, an industry official said.

“I have not had any specific approach (from the government) with regards to changes in the protein levels,” an industry official said. “At least not for today’s offer.”

An official at a Japanese trading firm said Japan bought wheat from Canada with the protein level of 13.3 percent before shipment since tenders in November. One cargo for a November tender, with shipments planned for January which had been delayed by about a month, has left a port in Canada.

“The conditions haven’t changed, but if Japanese standards for protein doesn’t ease, we may face a shortage of (the Canadian wheat),” the official said, adding that Japan could shift to buy more U.S. Dark Northern Spring type as an alternative.

Nobuyuki Chino, president of Tokyo-based trading company Unipac Grain, said Japan has in the past taken a flexible approach to protein levels and has bought a protein level around 13 percent in the 1990s.

Editing by Ed Lane

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