Rice supply and demand
Unfavorable weather hurts wheat, but rice production gets boost.
WASHINGTON, D.C., U.S. Following a record wheat crop in 2015, Japan’s production for 2016 is expected to decrease significantly due to unfavorable weather conditions.

Total Japanese production is estimated to decrease 25% to 760,000 tonnes, when factoring in harvest from Hokkaido, according to an Oct. 17 Global Agricultural Information Network report from the U.S. Department of Agriculture’s Foreign Agricultural Service (FAS).

About 65% of Japan’s wheat is grown in Hokkaido, and the Ministry of Agriculture, Forestry and Fisheries (MAFF) has yet to publicize production data for the area. Heavy rains delayed the harvest and negatively impacted the quality of the grain. As a result, yield and production estimates in that area are expected to be below average, the FAS said.

After the Hokkaido wheat was harvested in early August, a series of typhoons hit in early September and also severely damaged production of potatoes, onions and sugar beets and their fields. As wheat is part of the crop rotation with potatoes and sugar beets, planting of wheat has been delayed and a reduction in the planting areas is forecast in 2017.

Per-capita wheat consumption increased 4.1% in the last decade. Food wheat consumption is expected to remain strong at 5.9 million tonnes for market year 2016-17.

The average price of hard and semi-hard wheat classes (DNS, 1CW and HRW) fell 6.5% to 48,250 yen per tonne and the average price for soft wheat (ASW and WW) was reduced 10.4% to 48,920 yen per tonne. In accordance with declining imported wheat prices, prices of domestic wheat will be lowered, and flour millers are expected to lower flour prices in December.

Wheat is a minor ingredient in compound feed and the quantity used remained relatively flat at approximately 390,000 tonnes in 2014-15 and 2015-16. Despite competitive wheat prices, the FAS said wheat for feed use is unlikely to increase during this market year unless wheat prices become much lower than other feed ingredients.

As a result of an anticipated decrease in 2016 domestic production, total wheat imports in 2016-17 are expected to rebound to 5.8 million tonnes in order to meet demand.

Unlike wheat, favorable weather conditions are boosting 2016 rice production despite a reduced planting area. Total rice production is estimated at 7.79 million tonnes, up 120,000 tonnes.  MAFF estimates the 2016 rice-crop index is 103 (100 represents an average crop) and rice yields are above average at 5 tonnes per hectare.

Total rice planting area is down 15,000 hectares to 1.57 million hectares for several reasons, including a MAFF subsidy to shift farmers from table rice to other crops, such as wheat and soybeans.

MAFF has continued the subsidy for feed rice production in 2016, and estimates that the planting area for table rice production has decreased by nearly 25,000 hectares in 2016 (when compared to 2015) while the planting area for feed rice has increased by roughly 11,000 hectares.

MAFF has had some success in encouraging increased production of rice for feed and whole crop silage (WCS) on paddy field, the FAS said. As a result, Japanese feed rice production more than doubled in 2015, to 400,490 tonnes, partly offsetting the reduction in table rice production.

MAFF is encouraging rice feed production as the consumption of table rice continues to drop. Per-capita rice consumption dropped 1 kilogram to 54.6 kilogram in 2015, and MAFF estimates that total table rice consumption dropped 160,000 tonnes to 6.96 million tonnes in 2015-16. MAFF forecasts total table rice consumption will further decrease by 30,000 tonnes to 6.92 million tonnes in 2016-17.

For the first nine months of 2015-16, the utilization ratio of rice in compound feed increased only 0.1% to 5.1%, and this slow growth is attributable to competitive prices for corn. Demand for corn will continue to impact rice for feed use in 2016-17.

Since feed consumption is not expected to offset the 160,000-tonne decrease in table rice consumption, total rice consumption is expected to decrease 100,000 tonnes to 8.5 million tonnes in 2015-16.