Canada misses Japan wheat tender over low protein

(Reuters) — The Canadian Wheat Board didn’t fill a recent wheat tender from Japan because its wheat has a lower percentage of protein than Japan usually requires, a spokeswoman for the marketing agency said Thursday.

But the CWB remains confident of filling future tenders from Japan, its fourth-largest wheat export market, after talks with Japan’s ministry of agriculture, forestry and fisheries to work out contract specifications that match Canadian supplies, spokeswoman Maureen Fitzhenry said.

“Canada will continue to be supplying wheat to meet Japan’s needs,” Fitzhenry said in an interview. “This is an issue related to one tender of many that happen in the course of the year.”

Japan’s ministry of agriculture found no sellers for a planned purchase of 37,110 tonnes of milling wheat from Canada, but bought 61,603 tonnes of wheat from Australia as planned.

Global supplies of high-quality wheat have tightened due to wet weather and untimely frost last year in Western Canada and recent flooding in Australia.

Canada won’t have trouble finding markets for its wheat, even though quality is lower, said Ken Ball, commodities futures and options broker at Union Securities in Winnipeg.

“The world’s eager for wheat and even Japan will lower their standards if necessary… I can’t see it being a big issue.”

Fitzhenry said she doesn’t see U.S. dark northern spring wheat displacing Canadian shipments to Japan.

The March futures contract of Minneapolis spring wheat was up 0.5 per cent around midday Thursday. U.S. wheat prices have risen this week amid thoughts that the United States may benefit from rising demand due to tight, high-quality supplies.

Japan bought 225,100 tonnes of wheat from Canada during the first four months of the 2010-11 marketing year, or one-fifth less than it imported during the year-earlier period. That reduction reflects a later than usual harvest, Fitzhenry said.

Japan, which buys only high-quality milling wheat from Canada, usually wants a protein level of 13.5 to 14 per cent, Fitzhenry said.

The board had spring wheat available with between 13 and 13.3 per cent protein, so it did not fill the tender pending discussions with Japan’s agriculture ministry, she said.

Canada is the world’s biggest exporter of spring wheat.

Heavy snowfall and high avalanche potential in the Rockies, which stand between Prairie farms and Canada’s biggest grain port, are also hampering timing of wheat deliveries in general, Fitzhenry said.

— Rod Nickel writes for Reuters in Winnipeg.

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