Japan cuts April wheat price by 15pct

Japan cut wheat prices to flour millers by an average of 15 per cent in April, the most since October 2009, lowering costs for companies including Nisshin Seifun Group Inc.

Foreign wheat for sale by the government to Japanese millers will drop to ¥48,780 ($608) a metric tonne on average in April from ¥57,720, according to the Ministry of Agriculture, Forestry and Fisheries. Japan depends on imports for almost 90 per cent of its wheat, making it Asia’s largest buyer after Indonesia.

The reduction may increase deflationary pressure after consumer prices in Japan declined for the third straight year in 2011. Lower food costs could boost personal spending, which has shown signs of reviving amid a deepening export slump.

“Bumper harvests in countries such as Australia put the international market under pressure, leading to the cut in the Japanese price,” Vice Agriculture Minister Nobutaka Tsutsui told reporters in Tokyo today. “A strong yen was another reason for the reduction.”

The cut will help the flour-milling industry save about ¥44.7 billion a year, according to Masaaki Kadota, executive director at Japan’s Flour Millers Association.

Japan sourced about 60 per cent of the grain in the last fiscal year from the US, the biggest exporter. Overseas purchases and domestic sales are controlled by the agriculture ministry, which reviews the selling price to flour millers every six months.