Japan to cut imported wheat price for first time in 3 years

The Japanese government on Tuesday said it will lower the average price of imported wheat it sells to businesses for the first time in three years, as the global market settles from a surge triggered by the war in Ukraine.

The Ministry of Agriculture, Forestry and Fisheries said it will lower its selling price of imported wheat by 11.1% from the April-September period to an average of 68,240 yen (around $460) per tonne starting in October.

“This is bright news for consumers and manufacturers alike,” Agriculture Minister Tetsuro Nomura told reporters Tuesday. “We will keep a close eye on trends in international prices and other indicators.”

Japan imports around 80% of its wheat for human consumption. The government reassesses its selling price for five varieties of the grain in April and October based on global prices, currency rates and other factors.

Global wheat prices reached a record high of around $14 a bushel in March 2022 amid fears of supply disruptions in Russia and Ukraine, which are jointly responsible for around 30% of global wheat exports.

Prices have fallen nearly 60% since then, with the U.S. Department of Agriculture predicting record levels of global output of around 790 million tonnes for the marketing year beginning June 2023. Bushel prices reached the upper $5 range on Tuesday.

Yet concerns about the global market remain. Russia in July exited a grain deal that had allowed Ukraine to safely export goods via the Black Sea.

Russia’s growing footprint in the global wheat market has also raised alarm.

“Russian exports helped make up for the decline in Ukrainian shipments, which drove wheat prices down, but increased Russian influence over prices could pose risks in the future,” said Hideki Hattori, chief grain analyst at Japanese milling company Nippn.

Nisshin Seifun Group and other leading Japanese millers will consider lowering retail and wholesale prices for wheat flour in response to Tuesday’s announcement.

Meanwhile, food processors are carefully weighing their options. Nisshin Seifun Welna of the Nisshin Seifun Group cut retail prices for pasta this month in response to lower prices for North American durum wheat, which is not affected by the Tuesday announcement. The company has yet to decide whether to reduce prices for other wheat products as well.

Yamazaki Baking raised prices on sandwich bread and pastries in July. “Costs for certain raw materials remain high, so it is difficult to consider a price cut,” the company said.

Tags: prices, wheat, Japan