Japan’s feed grain imports could slow to a trickle in coming months as quake-hit feed mills make importers wary of signing new deals, and limited damage to the domestic rice crop will likely cap imports of the foodgrain.
Japan will instead resort to more imports of processed commodities such as soyoil, wheat products and meat to satisfy immediate needs as it limps back from last week’s earthquake and tsunami, which hit a fifth of the country’s animal feed makers.
Almost 20 percent of Japan’s animal feed plants were badly damaged and few units will resume operations within the next six months, forcing the world’s biggest importer of pork and chicken to make up the shortfall from the international market.
“Feed plants are flooded, silos are cracked and there is continued shaking, so livestock producers may skip production for a couple of months due to feed shortage and house damages,” said Jim Echle, who heads U.S. soy industry body ASA International Marketing in Japan.
“Some pig producers are seriously damaged with no feed, fuel or power for warming the baby pigs, it is really a terrible situation.”
Feed-making facilities were affected in the quake-hit Tohoku region, which makes up about 18 percent of Japan’s annual feed output of 24 million tonnes, industry sources say.
And the Kashima area in nearby Ibaraki, which also produces some 4 million tons of feed a year, has suffered damage.
“It could take half a year for feed manufacturers to fully recover,” said Nobuyuki Chino, president of Tokyo-based trading firm Unipac Grain. “Japan will need to import more pig and chicken meat for the next few months.”
But a plentiful supply of foodgrains will avert a spike in domestic prices.
Meat, Grain Imports at Risk
If the world’s third largest economy suffers in the aftermath of earthquake, analysts say, it could hurt the country’s grain and meat imports, a bearish factor for U.S. corn, wheat and soy futures.
Economists’ estimates of losses to Japanese output from damages to buildings, production and consumer activity ranged between 10 trillion yen to 16 trillion yen, at worst one-and-a-half times the losses during the 1995 Kobe earthquake.
Most expected the economy to contract in the second quarter of 2011 and a few economists also flagged the risk of prolonged disruption to consumers and companies and a decline in economic output through 2011 should power outages persist until December.
“If we do see significant adverse economic reaction in Japan to this disaster, then we might see an overall decline in meat consumption,” said commodity strategist Luke Matthews of the Commonwealth Bank of Australia. “The magnitude of any potential decline is uncertain at this point of time.”
Operators of a quake-crippled nuclear plant in Japan said they would try again on Thursday to use military helicopters to douse overheating reactors, as U.S. officials warned of a rising risk of a catastrophic radiation leak from spent fuel rods.
After South Korea, Japan May Need More Meat
Japan is the world’s biggest importer of pork, buying 1.2 million tons in 2010, and it accounted for 745,000 tons of broiler meat shipments last year, the world’s largest.
Higher purchases by Japan in the months ahead could bolster U.S. livestock futures , which have suffered losses on the prospects of the nuclear crisis.
Analysts said as they will add to strong pork purchases by neighbouring South Korea in last few months.
South Korea, grappling with an outbreak of foot-and-mouth disease, will nearly double tariff-free pork imports in the first half of this year and may extend the measure to the second half to boost supply and ease inflation.
Besides pork and chicken purchases, Japan is the world’s biggest buyer of corn and the third largest importer of soybean, the main ingredients in animal feed. It is also the world’s fourth-biggest importer of wheat, and plans to buy 4.96 million tonnes of milling wheat in the year to March 31.
Japan has 2.5 months of wheat stocks, 22 days of c