Japan snaps up more Canadian wheat, turns from U.S.

Tue Dec 10, 2013 4:22am EST

* Tokyo buys over 110,000 T of Western Red Spring in
surprise tender
    * Japan purchases of Canada grade up about 40 pct y/y in
Apr-Nov
    * Lower prices vs similar U.S. grade boost its appeal

    By James Topham
    TOKYO, Dec 10 (Reuters) - Japan snapped up Canadian wheat
for making bread and noodles in a surprise tender that closed on
Tuesday, ramping up purchases from the North American nation as
its prices fall on bumper harvests.
    Increased buying from Canada by the world's sixth-largest
importer of the grain is usurping appetite for wheat of similar
quality from the United States.
    Canada has been going head-to-head against the U.S. after
producing a record wheat crop this year filled with
lower-than-usual protein levels, making its prices attractive.
 
    "This entire month has been like a festival with all the
(Canadian) buying going on," said a grains trader in Tokyo,
referring to the latest tender and purchases at regular tenders.
    Japan's Ministry of Agriculture bought a total of 111,173
tonnes of Canadian Western Red Spring wheat in the special
tender on Tuesday, adding to the nation's stocks amid a shift
away from pricier U.S. Dark Northern Spring.
    Japan farm ministry purchases of Western Red Spring rose
almost 40 percent in April-November from the same period a year
ago to 899,810 tonnes, while orders for Dark Northern Spring
were down a third at 594,144 tonnes. Japan's fiscal year starts
in April.
    Over the same period, the average price Japan paid for
Western Red Spring at 35,757 yen ($350) per tonne was almost
2,000 yen cheaper than Dark Northern Spring, according to
Reuters calculations based on the ministry data.
    Japan typically buys five grades of food-quality wheat from
Australia, Canada and the U.S., including the Western Red Spring
and Dark Northern Spring varieties, via tenders usually issued
three times a month that close on Thursdays.
    Tokyo controls imports of wheat, its second most important
grain after rice, to protect domestic farmers and insulate
consumers from volatile markets.
    
    HEAVY SNOW
    Tuesday's extraordinary tender for the Canadian grade was
issued to offset any delays caused by a possible increase in
activity at Canadian ports due to its record harvest or by
winter weather, a farm ministry official said last week.
 
    Canada's monster crop levels have highlighted a logjam of
moving grains and oilseeds from country elevators to ports by
rail, just as Western Canada received heavy snow and frigid
temperatures last week. 
    The tender was for less than the total of 162,011 tonnes via
six cargoes that was originally targeted, however. The farm
ministry official said on Tuesday that he was looking into why
they were unable to fill the whole tender, which was several
times bigger than the 20,000-30,000 tonnes typically bought in
the mostly weekly regular tenders.
    Traders said the logistical problems in Canada may have been
behind this.
    "Although Canada had a bumper harvest, its export ability is
maxing out, so the (price) gap should eventually narrow further
as logistics get more expensive," said one Tokyo grains trader.
    Japan has boosted its purchases of Western Red Spring around
this time in past years to create ample stockpiles in case
shipments across the Pacific Ocean were delayed in the past, but
never at such a level, the trader said.
    The government official said last week that the surprise
tender did not mark a change in Japan's wheat buying procedures.
    The supplementary tender for the Canadian grade added to the
four cargoes the agriculture ministry took last week in its
regular milling wheat tender, more than the one or two they
normally buy. 

    Purchase details are as follows (in tonnes):
    COUNTRY           TYPE                         QUANTITY
    Canada            Western Red Spring            30,080*
                      (protein minimum 12.5 pct)
    
    Canada            Western Red Spring            27,540**
                      (protein minimum 12.5 pct)
    
    Canada            Western Red Spring            24,610**
                      (protein minimum 12.5 pct)
    
    Canada            Western Red Spring            28,943**
                      (protein minimum 12.5 pct)
    
    Shipments: * Arrival by March 31; **Arrival by April 30.
($1 = 103.1150 Japanese yen)

 (Editing by Joseph Radford)
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