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Canada offers wheat, Japan buys as planned

Japan bought food wheat from Canada at a regular tender on Thursday and a Canadian Wheat Board memo shows it managed to find scarce high-protein supplies despite a global shortage of top-quality wheat.

The CWB sold Japan’s ministry of agriculture 37,110 tonnes of top-grade spring wheat for shipping March 12 to April 11, with a guaranteed minimum protein content of 13.3 per cent — the level Japan usually requires — according to a marketing document that the board sent Feb. 2 to Canadian grain shippers.

The board’s ability to fill the tender on Japan’s usual terms, according to Canadian and Japanese industry sources, means Japan has not yet had to reduce standards for top-quality milling wheat, after a year in which Canadian and Australian floods have downgraded crops.

The CWB did not offer to the same tender from Japan last week, pending discussions about the lower than usual protein level in much of Canada’s wheat.

Japan’s ministry of agriculture bought a total of 183,640 tonnes of food wheat from the U.S., Canada and Australia as planned.

The CWB wouldn’t comment on the sale’s protein level.

“The CWB sold wheat against today’s tender and continues to work through some of the outstanding issues with Japan,” Derek Sliworsky, general manager of the board’s Tokyo office, said in a statement to Reuters.

“As a result of continued discussions and progress on our sourcing and transportation of high-grade wheat, we were able to get to a point where we were able to offer and sell against today’s tender.” 

But Canadian grain traders said they’re doubtful the CWB can fill future Japanese tenders at usual quality levels. 

“My guess is next time, it’s going to be a lower protein,” a Canadian grain source said.

Food reserves

Any lowering of buying standards by Japan — one of the world’s biggest top-quality wheat buyers — would highlight tightness of supplies, which has contributed to high food prices and protests in North Africa and the Middle East.

Panic buying by countries in those regions has abated after they built up food reserves, according to analysts and U.S. government data Thursday that showed U.S. wheat export sales fell last week by 40 per cent from the prior week.

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.

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

“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.” 

Japan buys about five million tonnes of foreign wheat a year for milling use, which accounts for about 90 per cent of domestic consumption.

“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 per cent before shipment since tenders in November.

“The conditions haven’t changed, but if Japanese standards for protein don’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 per cent in the 1990s.

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