The food self-sufficiency rate for FY2020 announced by the Ministry of Agriculture, Forestry and Fisheries in Japan at the end of August was 37.17%, a decrease of 0.38 points from the previous year on a calorie basis. In terms of comparable numbers, it was the lowest ever since 1965. The background to this is that in addition to the decrease in rice consumption, the number of livestock products that rely on imports of feed from overseas has increased. Under these circumstances, the Ministry of Agriculture, Forestry and Fisheries has recently decided to raise the price of imported wheat significantly. (Photo quoted from Yahoo’s image)


The Ministry of Agriculture, Forestry and Fisheries announced on September 8 that it has set a government selling price for imported wheat for the fiscal year ending October 2021. The weighted average of the five stocks increased by 19% from the April quarter to 61,820 yen per ton.


The Ministry of Agriculture and Fisheries analyzed that it was due to the trend in China, which bought a large amount of wheat from the United States and Canada, and the rise in international wheat prices due to the increase in global demand for feed. In addition, poor cropping due to bad weather in Canada and rising sea freight rates due to recovery in transportation demand are thought to have led to an increase in government selling prices.


The grain market was on the rise towards the summer of this year, but the Chicago Board of Trade (CBOT), an international indicator of wheat prices, has recently settled down. This is because a good harvest is expected in Australia and the European Union (EU) etc, which are major producers. On September 24, CBOT closed wheat (nearly) for $ 7.2375 per bushel.


According to the latest grain supply and demand report released by the US Department of Agriculture (USDA) in September, the global wheat production forecast for 2021-22 was 780.28 million tons, up 0.6% from the previous year. This is expected to be the highest ever, with an upward revision to the numbers announced in August.


Regarding the food supply and demand ratio in Japan mentioned above, by item, rice was 98% and vegetables were 76%, while soybeans were 21%, wheat was 15%, oils and fats were 3%, and grains that depended on imports were low.


In these days when abnormal weather occurs frequently all over the world, even grain importers may not be able to immediately respond to the decrease in harvest due to the deterioration of cropping depending on the weather in the production area due to the procurement of raw materials. However, just holding hands does not lead to any solution.


By checking market trends, it may be possible to hedge against price fluctuations by using the futures market as much as possible. For that purpose, it is necessary to collect and analyze a wide range of information, including not only the supply-demand relationship of grains, but also meteorological data, military and diplomatic information such as the Ministry of State and the Department of Defense, and the monetary policy of central banks of each country.



Jiro Arihara

 Global Commodity Watcher