Shortages prompted changes in Japan, Taiwan that prove difficult to unwind
By MATTHEW WEAVER
Wheat industry representatives are working with officials in Japan and Taiwan to increase the amount of club wheat used in a major blend.
Washington Grain Commission CEO Tom Mick said Japan is the largest buyer of Western white wheat, a blend of soft white wheat and club wheat that millers prefer.
Due to short supplies and high price premiums for club wheat last year, Japan reduced the percentage used in the blend from 20 to 10 percent. At the time, buyers promised to return to the higher percentage when a new crop became available.
Taiwan, also a large buyer of Western white wheat, decided to switch to soft white wheat in response to the high premium for club wheat. They also haven't returned to 20 percent club wheat blends, Mick said.
The current crop of club wheat is nearly double last year's production, and is more than enough to meet everyone's needs, Mick said.
If Japan does not return to its normal 20 percent blend, there will be more club wheat left over than anticipated, which usually suppresses prices.
"We could see a disappearance of the club premium if we have huge stocks," Mick said. "Then farmers will react by not planting and 21/2 years from now, we'll be back in a shortage situation."
The commission wants to stabilize the club wheat market with a premium acceptable to growers and buyers, he said.
Flour millers would like to return to a 20 percent blend, but Mick attributed the situation to internal issues within the governments of Japan and Taiwan.
The commission is working with both countries to reinstate the previous blend and is monitoring the situation closely.
Vince Peterson, vice president of overseas operations for U.S. Wheat Associates, recently sent a letter to the Japanese Flour Millers Association to follow up on private discussions with the industry urging a return to the 20 percent blend.
Peterson said the Japanese industry is still struggling internally, and asked for statistical support and recommendations from the U.S.
The process is ongoing, Peterson said, with discussions to get millers and Japan's Ministry of Agriculture, Forestry and Fisheries, which handles import purchases, in agreement.
Peterson believes a raise in the percentage is likely.
"It was a bureaucratic decision in the first place to go from 20 percent to 10 percent," he said. "Then you have to unwind that bureaucratic decision. To me, it's a matter of time, not so much if they will do it."
Washington Grain Commission: www.washingtongrainalliance.com
U.S. Wheat Associates: www.uswheat.org