Japan govt to raise imported wheat prices by 17.3％

Jiji Press

17:46 JST, March 10, 2022

TOKYO (Jiji Press) — The agriculture ministry said Wednesday that it will raise the prices of the imported wheat it sells to the private sector by 17.3% on April 1.

The weighted average of the prices of five wheat products will rise to ¥72,530 per ton, its second-highest level since comparable data became available in 2007, next only to ¥76,030 in October 2008.

The sharp increase comes as grain prices remain at a high level on the global market due partly to a drought-caused bad harvest in North America.

The higher wholesale prices will add to upward pressure on the already increasing retail prices of many bread and noodles products from around this summer.

Wheat prices are increasingly likely to rise further following the next price revision set for October, as the impact from the Russia-Ukraine crisis and global sanctions against Russia has only partially been taken into account.

The government, the exclusive buyer of foreign wheat, revises its wholesale prices for milling companies every April and October.

Japan relies on imports for about 90% of its wheat supply. Milling companies pass on changes in the wholesale prices to the prices of wheat products they sell about three months later.

These changes are then passed on to the prices of flour-using products gradually after that.

In the upcoming April revision, the state selling price will be raised for the third straight time, which the ministry expects to push up bread prices by ¥2.6 per loaf, or 1.5%, and family-use flour prices by ¥12.1 per kilogram, or 4.4%.

Russia’s invasion of Ukraine is having a serious impact on wheat prices.

Nearly 30% of global wheat exports comes from the two nations, and the intensification of fighting in Ukraine and tougher sanctions on Russia may strain the demand-supply balance.

On Tuesday, wheat futures soared to hit a record high briefly on global commodity markets.

The Agriculture, Forestry and Fisheries Ministry is expected to reflect the recent rises in market wheat prices under its October revision, and a sharp increase is inevitable if the situation continues to be tense.

“We’ll reach out to the governments of the United States and Australia, where we import wheat, and collect thorough information in an effort to ensure stable supply,” a ministry official said.