Japan eyes feed wheat, rice to replace some corn imports

GRAINS-JAPAN/(UPDATE 1)

* Feed wheat, rice could replace some Japan corn imports -trader

* Considering plans to replace 1 mln tonnes of corn imports

* Spurred by tight U.S. grain supplies, high prices

* Argentina, Brazil, Ukraine among possible alternatives (Refiles to fix bullet points)

By Manolo Serapio Jr

SINGAPORE, Feb 16 (Reuters) - Japan, grappling with prospects of tight U.S. corn  supplies and soaring prices, is considering plans to replace 1 million tonnes of its imports of the grain this year with feed wheat and rice, a trader said on Wednesday.

World grain supplies have been tightening for months as droughts and floods, coupled with unrelenting demand for feed, food and fuel caused prices of wheat and corn to more than double from last summer's lows.

Global food prices have reached "dangerous levels", World Bank chief Robert Zoellick said on Tuesday, warning that their impact could complicate fragile political and social conditions in the Middle East and Central Asia.

Japan imports around 16 million tonnes of corn annually, of which 12 million tonnes are destined for animal feed, with the rest used as food. The country sources 95 percent of its corn imports from the United States.

"We can replace some with feed wheat and rice, maybe 1 million tonnes," Mitsutoshi Tada, chief grains trader for the National Federation of Agricultural Cooperative Associations in Japan, told Reuters on the sidelines of a grains conference in Singapore.

With the United States expected to run tighter on corn supply than it has for decades, corn and wheat prices are near multi-year highs after a series of supply shocks and unrelenting demand.

Last week the U.S. government slashed its forecast for corn stockpiles by 9 percent, projecting the tightest supply since the Great Depression as a record amount of the crop is used to make ethanol.

Corn prices in Chicago jumped to their highest since July 2008 after the U.S. report showed stocks would dwindle to 675 million bushels by the Aug. 31 end of the marketing year, a move that could force end users to scale back use of the grain.

Argentina, the world's second-largest corn exporter, is also facing problems, as its corn crop has been hit by the La Nina weather pattern. The Buenos Aires Grains Exchange sees corn output down 17 percent at 19.5 million tonnes from 23.5 million in the 2009/10 season.

Tada said Argentina, Brazil and Ukraine were alternative sources being considered by the Japanese grouping, but U.S. corn was the most competitive at the moment.

In another move that flags the growing determination to tie up feed supplies, the Philippines has bought 200,000 tonnes of Australian feed wheat for April-June shipment at prices ranging between $285 and $315 a tonne, cost-and-freight basis (C&F), traders at the conference said.

World Bank data released on Tuesday showed higher food prices -- mainly for wheat, maize, sugars and edible oils - have pushed 44 million more people in developing countries into extreme poverty since June 2010.

"There is no room for complacency," Zoellick told a conference call. "Global food prices are now at dangerous levels and it is also clear that recent food price rises are causing pain and suffering for poor people around the globe."

He warned that a sharp rise in food prices across Central Asia could also have social and political implications for that region.

The World Bank report comes days before a meeting of the Group of 20 major economies in France where higher food prices and reasons for those upward spikes will be discussed. (Reporting by Manolo Serapio, Jr; Writing by Clarence Fernandez; Editing by Ramthan Hussain)

(Source: http://www.forexyard.com/en/news/Japan-eyes-feed-wheat-rice-to-replace-some-corn-imports-2011-02-16T031708Z-REFILE-UPDATE-1)