The utilization of rice for the composition of compound feed has continuously been over 5% between October 2015 and March 2016. The utilization of corn has increased to 46% from 45% in 2014-15, while the ratio of sorghum has dropped below 3% -- the lowest on record.
Japan maintains a feed price stabilization program that consists of a combination of a Ministry of Agriculture, Forests and Fisheries (MAFF) subsidy and an industry fund to help absorb sudden surges in compound feed prices. It is activated when the import cost of ingredients in a particular quarter exceeds the average import cost of ingredients in the previous year. No compensation payments were made throughout Japan Fiscal Year (JFY, April – March) 2015, reflecting lower prices of corn, soy meal and freight.
Reflecting an abundant global supply, prices of imported feed corn have gradually declined and fell below $200 per tonne in March 2016 for the first time since January 2007. Feed millers took advantage of low prices, raising total corn imports 5% in the first seven months of 2015-16 (October 2015–April 2016) compared to the same period in the previous year, and corn utilization in compound feed has increased to 46%. If the price of corn remains attractive, robust demand for feed corn is expected to continue and raise feed corn consumption to 11.5 million tonnes in 2015-16. As there is no sign of significant changes in food, seed and industrial (FSI) consumption (3.6 million tonnes in 2015-16), total corn imports are expected to reach approximately 15 million tonnes in 2015-16. For 2016-17, feed consumption is forecast to stay flat if the corn price stays at the current level, and FSI consumption is also forecast to remain unchanged.
As Japan relies almost entirely on imported grains for manufacturing feed, the Japanese government operates its regular contingency plan to hold imported corn and sorghum in reserve. In JFY 2015, Japan held a total of 1.25 million tonnes of feed grain in reserve; 600,000 tonnes by the Japanese government and 650,000 tonnes by the private sector. Beginning in JFY 2016, the Japanese government no longer holds reserves but the private sector holds 850,000 tonnes of feed grain, and the Japanese government subsidizes the storage costs for 5/17 of the 850,000 tonnes (250,000 tonnes). In addition to corn and sorghum, the feed grain reserve program was expanded to include barley, wheat, bran, and soybean meal. However, industry sources say that corn continues to account for the majority of the reserve. Accordingly, stocks are expected to gradually reduce from 1.35 million tonnes in 2014-15 to 1.25 million tonnes in 2015-16 and to one million tonnes in 2016-17, and will likely offset the need for some imports over the next few years. The report forecasts a slight decline in total corn imports from 15 million tonnes in 2015-16 to 14.9 million tonnes in 2016-17.
Almost all sorghum is used for feed, of which over 90% is consumed by the swine and poultry sectors. The utilization ratio of sorghum in compound feed fell below 3% in recent months, the lowest level on record due mainly to an increase in the utilization of rice and corn. As a result, the quantity of sorghum used in compound feed dropped 30% in the first half of 2015-16, and imports also fell 30%. Accordingly, consumption and imports of sorghum are expected to decline to 750,000 tonnes and 780,000 tonnes, respectively, in 2015-16. With an anticipated increase of rice used in compound feed, consumption and imports of sorghum are forecast to further decrease in 2016-17.
