Japan's appetite for U.S. corn seen bouncing back

By Risa Maeda

TOKYO, April 24 (Reuters) - Japan's appetite for U.S. corn is expected to rebound this year on concerns about limited availability from China and South America, but a slowdown in demand from the poultry sector will limit growth.

The world's biggest corn importer, which annually buys about 12 million tonnes of the grain for feed, bought 11.2 million tonnes from the United States in 2007, down 7 percent. In contrast, imports from China doubled to 557,000 tonnes and those from Argentine rose almost four times to 279,000 tonnes.

But a farmers' strike and uncertain loading schedules in Argentina, coupled with Beijing's aim to discourage grain exports, are ringing alarm bells for Japanese buyers who are shying away from taking a risk and signing import contracts from those origins.

"A switch back to the United States is highly likely as last year's somewhat frenzied buying of cheaper grains from Argentina and China will not be repeated," said Nobuyuki Chino, president of Tokyo-based trading firm Unipac Grain.

Traders said imports of U.S. corn could grow 5 percent this year despite a rally in Chicago futures to a record above $6 per bushel CK8, up more than 60 percent from a year earlier.

Japan depends entirely on corn imports as domestic supplies of the grain, the main component of feed in Japan, is negligible.

In addition to soaring prices of corn, imports of other grains, which can be used as an alternative to corn, such as rice, wheat or sorghum, are as expensive as corn.

Feed makers are expected to seek alternative feed ingredients to U.S. corn only if the price rises to around $8 per bushel, a general manager at a Tokyo-based trading firm said, quoting an estimate by a major Japanese compound feed maker.