Required Report - public distribution

**Date:** 3/2/2006

**GAIN Report Number:** JA6012

JA6012

**Japan**

**Grain and Feed**

**Grain and Feed Annual Report**

**2006**

**Approved by:**

![](media/image1.wmf)Deanna Ayala

U.S. Embassy

**Prepared by:**

Hisao Fukuda

**Report Highlights:**

In 2005, the U.S. maintained a sound share in rice and wheat imports.
Despite stagnant overall demand for feed grains in Japan, U.S. imports
of corn, sorghum and barley combined reached the highest level in the
last five years. This was attributed to the recovery of sorghum and
barley imports. Although both consumption and imports of grains will
remain steady in the short term, demand for rice and wheat is expected
to decline over time with changing demographics (aging population).
Demand for feed grains will also likely decline in the long term as
Japan\'s livestock population continues to shrink.

Includes PSD Changes: Yes

Includes Trade Matrix: No

Annual Report

Tokyo \[JA1\]

\[JA\]

Table of Contents

[**RICE 4**](#rice)

[Production Near Normal Year 4](#production-near-normal-year)

[Downward Rice Consumption Trend Continues
4](#downward-rice-consumption-trend-continues)

[Rice Price Returns to Normal 5](#rice-price-returns-to-normal)

[U.S. Maintains Near 50% Share of Imports
6](#u.s.-maintains-near-50-share-of-imports)

[Early implementation of the Maximum Residue Levels (MRLs) disrupts rice
imports
6](#early-implementation-of-the-maximum-residue-levels-mrls-disrupts-rice-imports)

[Trade for Processed Rice Products
8](#trade-for-processed-rice-products)

[Stocks 8](#stocks)

[Minimum Access Commitment Continues into 2006
9](#minimum-access-commitment-continues-into-2006)

[Export of Rice under Food Aid 10](#export-of-rice-under-food-aid)

[Japan's Food Self-Sufficiency Ratio Again Stays at 40 percent and GOJ
Embarks on New "Food Education" Initiative
10](#japans-food-self-sufficiency-ratio-again-stays-at-40-percent-and-goj-embarks-on-new-food-education-initiative)

[Marketing 11](#marketing)

[WHEAT 11](#wheat)

[Production in 2005 up 2 Percent 12](#production-in-2005-up-2-percent)

[New Subsidy Scheme Announced 12](#new-subsidy-scheme-announced)

[Wheat Consumption Stays Flat 12](#wheat-consumption-stays-flat)

[Utilization Patterns 13](#utilization-patterns)

[Government Resale Price for 2006 Lowered Again
13](#government-resale-price-for-2006-lowered-again)

[Wheat Imports Stay Strong in 2005
14](#wheat-imports-stay-strong-in-2005)

[Stocks 15](#stocks-1)

[Feed Wheat Imports through SBS System
15](#feed-wheat-imports-through-sbs-system)

[Marketing 16](#marketing-1)

[CORN 16](#corn)

[Production 16](#production)

[Overall Corn Demand Stable; Stagnant Feed Demand Offset by Increased
Food Use
16](#overall-corn-demand-stable-stagnant-feed-demand-offset-by-increased-food-use)

[Utilization Patterns 17](#utilization-patterns-1)

[Production of Feed Likely to Stay Flat in 2005/06 while Strong Food
Demand Expected to Continue
19](#production-of-feed-likely-to-stay-flat-in-200506-while-strong-food-demand-expected-to-continue)

[Prices 19](#prices)

[Trade Returns to U.S. as Starlink Issue Diminishes, but Aflatoxin
Concern Arises
20](#trade-returns-to-u.s.-as-starlink-issue-diminishes-but-aflatoxin-concern-arises)

[Stocks 21](#stocks-2)

[Government Stocks Released to Ease Impact of Hurricane Katrina
21](#government-stocks-released-to-ease-impact-of-hurricane-katrina)

[Marketing 21](#marketing-2)

[SORGHUM 21](#sorghum)

[Production 21](#production-1)

[Consumption 21](#consumption)

[Prices 22](#prices-1)

[Trade 22](#trade)

[Stocks 23](#stocks-3)

[Marketing 23](#marketing-3)

[BARLEY 23](#barley)

[Production 23](#production-2)

[Consumption 24](#consumption-1)

[Prices 24](#prices-2)

[Trade 24](#trade-1)

[SBS Tender for Feed Barley since 1999
25](#sbs-tender-for-feed-barley-since-1999)

[Stocks 26](#stocks-4)

[Marketing 26](#marketing-4)

[RYE 26](#rye)

[Production 26](#production-3)

[Consumption 26](#consumption-2)

[Prices 26](#prices-3)

[Trade 26](#trade-2)

[Stocks 27](#stocks-5)

[BEANS 27](#beans)

[Production 27](#production-4)

[Consumption 27](#consumption-3)

[Trade 28](#trade-3)

[Policy 29](#policy)

[PS&D 30](#psd-1)

[Rice PS&D Table 30](#rice-psd-table)

[Wheat PS&D 31](#wheat-psd)

[Corn PS&D Table 32](#corn-psd-table)

[Sorghum PS&D 33](#sorghum-psd)

[Barley PS&D 34](#barley-psd)

[Rye PS&D 35](#rye-psd)

[Beans PS&D 36](#beans-psd)

# RICE

## Production Near Normal Year

As part of its rice policy reforms the Ministry of Agriculture, Forestry
and Fisheries (MAFF) has decided to phase out government controls on
production by fiscal 2008. As an interim measure, starting 2004, the
production control scheme based on the acreage reduction program ended.
Instead, a production volume target is set for each prefecture based on
demand forecasts by a third party. (Refer to GAIN Report #JA3012,
Japan's Proposed Rice Reforms.) For 2005 the national target volume was
set at 8,510,000 metric tons (MT).

Despite some damage caused by typhoons in the southern island of Kyushu,
overall national production ended with 1% above a normal year yield for
the total volume of 9,074,000 MT. This is 564,000 MT greater than the
target volume.

  ------------- ----------- -------- --------- ------------ ------- -------- ------------- --------
  ***Table                                                                                 
  1.***                                                                                    

  ***Japan\'s                                                                              
  Rice                                                                                     
  Production                                                                               
  (Brown                                                                                   
  Basis)***                                                                                

                                                                                           

                Planted                        Production                    Yield/10 ares 
                Area (1,000                    (1,000                        (kilograms)   
                hectares)                      metric tons)                                

                Total       Paddy    Upland    Total        Paddy   Upland   Paddy         Upland

  2001          1,706       1,700    6         9,057        9,048   9        532           144

  2002          1,688       1,683    5         8,889        8,876   13       527           225

  2003          1,665       1,660    5         7,792        7,779   13       469           250

  2004          1,701       1,697    4         8,730        8,721   9        514           200

  2005          1,706       1,702    4         9,074        9,062   12       532           266

  Source: MAFF                                                                             
  ------------- ----------- -------- --------- ------------ ------- -------- ------------- --------

## Downward Rice Consumption Trend Continues 

According to MAFF's latest "Food Balance Sheet", the average annual per
capita consumption of rice in 2004 dropped slightly again to 61.5
kilograms from 61.9 kilograms in 2003, which is almost one half of the
peak of consumption in 1962 of 118.3 kilograms. The fundamental reason
for the decline is westernized and diversified Japanese eating habits,
and reversing the downward trend appears difficult in the medium term.
Coupled with the demographic situation where Japan's population peaked
in 2005, faster than previously forecast, and it is also aging rapidly
(one out of four Japanese will be older than 65 by 2015), longer term
prospects are also grim.

  ---------------- -------- ------- ------- ------- ------- -------- ------- --------
  ***Table 2.***                                                             

  ***Annual Per                                                              
  Capita                                                                     
  Consumption of                                                             
  Rice in Japan                                                              
  (Kilograms)***                                                             

                                                                             

  1962             1965     1975    1985    1995    2002    2003     2004    2005\*

  118.3            111.7    88.0    74.6    67.8    62.7    61.9     61.5    61.0

  \* Ag Office                                                               
  estimate                                                                   

  Source: MAFF                                                               
  ---------------- -------- ------- ------- ------- ------- -------- ------- --------

![](media/image2.wmf)

As a result of the reduction in consumption, as well as a decline in the
price over the years, household expenditures on rice have been cut by
more than half during the last two decades. The average Japanese
household now spends about 4 percent of food expenditures on rice.

  -------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
  ***Table 3.***                                                                                                 

  ***Average Monthly                                                                                             
  Expenditures on Rice                                                                                           
  by Japanese                                                                                                    
  Household (in                                                                                                  
  Yen)***                                                                                                        

                                                                                                                 

                       1985      1997      1998      1999      2000      2001      2002      2003      2004      2005\*

  Total                273,114   333,313   328,186   323,008   317,133   308,692   306,129   302,623   304,203   302,903

  Expenditure                                                                                                     

  Food                 73,735    78,306    78,156    76,590    73,844    71,534    71,286    70,260    70,116    68,910

  Expenditure                                                                                                     

  Expenditure          6,233     3,863     3,712     3,527     3,291     3,113     2,992     3,041     3,044     2,681

  on Rice                                                                                                         

  \% rice/food         8.50%     4.90%     4.70%     4.60%     4.50%     4.40%     4.20%     4.30%     4.34%     3.89%

  Source: Ministry of                                                                                            
  Management, Home                                                                                               
  Affairs, Post and                                                                                              
  Telecommunications                                                                                             

  \*Preliminary                                                                                                  
  -------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------

## 

## Rice Price Returns to Normal

Due to the short crop in 2003, wholesale prices in early RY 2003 soared
20 to 50 percent over the previous year (pushing up the retail price in
2004 due to a time lag). Since 2004 wholesale prices have been stable
and the retail price returned to the 2002 level.

![](media/image3.wmf)

  -------------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
  ***Table 4.***                                                                       

  ***Retail Price of                                                                   
  Rice in Tokyo Area                                                                   
  (Yen/10 kg)***                                                                       

                                                                                       

  1996                 1997    1998    1999    2000    2001    2002    2003    2004    2005

  5,374                5,218   5,017   5,059   4,934   4,745   4,788   4,983   5,527   4,749

  Source: Ministry of                                                                  
  Management, Home                                                                     
  Affairs, Post and                                                                    
  Telecommunications                                                                   
  -------------------- ------- ------- ------- ------- ------- ------- ------- ------- -------

## 

## U.S. Maintains Near 50% Share of Imports

Currently, for the Japanese fiscal year (JFY) 2005 (April 2005--March
2006), the total U.S. market share remains at the same level as previous
years. To date MAFF has held four Simultaneous Buy and Sell (SBS)
tenders and eight Ordinary Minimum Access (OMA) tenders. Although the
SBS portion (100,000 MT) has been successfully filled, there remains
about 80,000 MT under the OMA portion for Japan's commitment to be
filled. Therefore, it is expected that another OMA tender will be held
within March.

## Early implementation of the Maximum Residue Levels (MRLs) disrupts rice imports

Japan's Ministry of Health, Labor and Welfare (MHLW) published
comprehensive revisions to its regulations on allowable pesticide and
veterinary drug residues in foods. The final version was published in
Japan on November 28, 2005 following official notification to the World
Trade Organization (WTO) with a 60-day comment period during the summer
of 2005. MHLW announced that it would start to enforce the new MRL
standards on May 29, 2006. (The provisional English version of this
so-called "positive list" is posted on MHLW's website:
http://www.mhlw.go.jp/english/topics/foodsafety/positivelist060228/index.html)
Please also refer to GAIN Report JA6004: Summary of Japan's New Positive
List System.

At the same time that MHLW was finalizing the new MRL standards, Japan's
Ministry of Agriculture, Fisheries, and Forestry (MAFF) separately
informed foreign shippers of rice, wheat, and barley to Japan that it
would require imported shipments of these commodities to be in
compliance with the new MRL requirements as of December 2005, and not
May 29, 2006 as provided in MHLW's proposal. Further, MAFF made other
changes involving SBS rice tenders including tender dates, shipment size
minimums, and testing protocols in conjunction with enforcement of the
new MRL standards in December 2005.

Since these changes were enforced in the middle of the year, rice
importers, particularly SBS rice importers who normally contract with
suppliers in early spring, experienced difficulty dealing with the new
requirements.

Adding to already existing difficulty in getting rice through the SBS
system, the new MRL regime is expected to make the SBS business, which
is practically the only way for U.S. rice to reach Japanese consumers,
even more difficult, further limiting market development efforts and
undermining U.S. producers' commitment to produce Japan specific
varieties of rice.

  ------------- ----------- ---------- ----------- ---------- ---------- -----------
  ***Table                                                               
  5.***                                                                  

  ***Results of                                                          
  Japan\'s                                                               
  Minimum                                                                
  Access Rice                                                            
  Tenders (JFY                                                           
  1995 -                                                                 
  2005)***                                                               

  ***(Actual                                                             
  Tonnage)***                                                            

                                                                         

                U.S.        Thailand   Australia   China      Others     Total

  ***JFY        Two more                                                  
  2005***       OMA tenders                                              
                remaining                                                

  SBS           17,894      1,784      4,084       75,684     554        100,000

  *Share*       *17.89%*    *1.78%*    *4.08%*     *75.68%*   *0.55%*    *100.00%*

  OMA           273,000     148,500    13,000      0          70,000     504,500

  *Share*       *54.11%*    *29.44%*   *2.58%*     *0.00%*    *13.88%*   *100.00%*

  Total         290,894     150,284    17,084      75,684     70,554     604,500

  Share         *48.12%*    *24.86%*   *2.83%*     *12.52%*   *11.67%*   *100.00%*

  ***JFY                                                                  
  2004***                                                                

  SBS           23,413      1,211      4,658       63,877     829        93,988

  *Share*       *24.90%*    *1.30%*    *5.00%*     *68.00%*   *0.90%*    *100.00%*

  OMA           298,500     163,300    13,000      24,000     85,944     584,744

  *Share*       *51.05%*    *30.80%*   *2.50%*     *1.40%*    *9.40%*    *100.00%*

  Total         321,913     164,511    17,658      87,877     86,773     678,732

  Share         *47.43%*    *24.24%*   *2.60%*     *12.95%*   *12.78%*   *100.00%*

  ***JFY                                                                  
  2003***                                                                

  SBS           18,216      1,145      1,570       78,803     266        100,000

  *Share*       *18.20%*    *1.10%*    *1.60%*     *78.80%*   *0.30%*    *100.00%*

  OMA           298,000     134,700    78,400      19,500     40,500     571,100

  *Share*       *52.20%*    *23.60%*   *13.70%*    *3.40%*    *7.10%*    *100.00%*

  Total         316,216     135,845    79,970      98,303     40,766     671,100

  Share         *47.10%*    *20.20%*   *11.90%*    *14.60%*   *6.10%*    *100.00%*

  ***JFY                                                                  
  2002***                                                                

  SBS           20,122      1,327      4,077       24,247     294        50,067

  *Share*       *40.20%*    *2.70%*    *8.10%*     *48.40%*   *0.60%*    *100.00%*

  OMA           301,676     134,808    82,500      75,690     34,800     629,474

  *Share*       *47.90%*    *21.40%*   *13.10%*    *12.00%*   *5.50%*    *100.00%*

  Total         321,798     136,135    86,577      99,937     35,094     679,541

  *Share*       *47.40%*    *20.00%*   *12.70%*    *14.70%*   *5.20%*    *100.00%*

  ***JFY                                                                  
  2001***                                                                

  SBS           25,173      421        8,529       65,702     175        100,000

  *Share*       *25.20%*    *0.40%*    *8.50%*     *65.70%*   *0.20%*    *100.00%*

  OMA           298,877     129,376    91,500      55,516     4,700      579,969

  *Share*       *51.50%*    *22.30%*   *15.80%*    *9.60%*    *0.80%*    *100.00%*

  Total         324,050     129,797    100,029     121,218    4,875      679,969

  *Share*       *47.70%*    *19.10%*   *14.70%*    *17.80%*   *0.70%*    *100.00%*

  ***JFY                                                                  
  2000***                                                                

  SBS           46,273      4,960      14,269      53,264     1,234      120,000

  *Share*       *38.60%*    *4.10%*    *11.90%*    *44.40%*   *1.00%*    *100.00%*

  OMA           284,000     144,370    94,000      35,000     15,669     573,039

  *Share*       *49.60%*    *25.20%*   *16.40%*    *6.10%*    *2.70%*    *100.00%*

  Total         330,273     149,330    108,269     88,264     16,903     693,039

  *Share*       *47.70%*    *21.50%*   *15.60%*    *12.70%*   *2.40%*    *100.00%*

  Source: MAFF                                                           
  ------------- ----------- ---------- ----------- ---------- ---------- -----------

## Trade for Processed Rice Products

The United States is the third largest exporter of rice flour
preparations to Japan after Thailand and China. Japanese users' demand
for imported rice flour preparations continues to be strong in 2005
because of a significant price advantage over domestic non-table rice.

In June 2005, the Ministry of Agriculture, Forestry and Fisheries (MAFF)
started to release stocks of imported rice into the rice flour sector in
an effort to curb the "surge" of imports of rice flour preparations.
Although the statistics show that this new release program has not so
far had a sizeable impact on the imports of rice flour preparations from
the U.S. Post will continue monitoring the movements.

The U.S. share in the imports of rice crackers, pilaf and *sake* (rice
wine) remains small due to high labor costs compared to those in
countries like Thailand (the largest exporter of rice crackers), China
(the largest exporter of pilaf) and the Republic of Korea (the largest
exporter of *sake*).

## 

  ------------------- --------- --------- --------- -------- --------- --------
  ***Table 6.***                                                       

  ***Japanese Imports                                                  
  of Processed Rice                                                    
  Products***                                                          

  ***(MT, except                                                       
  sake)***                                                             

                                                                       

                      CY 2003             CY 2004            CY 2005   

                      Total     U.S.      Total     U.S.     Total     U.S.

  Flour preparations  111,761   28,173    122,324   29,983   120,633   31,890

  Rice Crackers       7,478     1         9,023     3        9,475     0

  Pilaf               611       2         1,148     158      1,117     74

  Sake (1,000 liters) 2,537     4         2,608     0        3,016     0

  Source: Ministry of                                                  
  Finance                                                              
  ------------------- --------- --------- --------- -------- --------- --------

## Stocks 

MAFF holds emergency stocks of rice whose appropriate level is currently
targeted at 1 million MT. However, this does not include the Minimum
Access (MA) rice. The official supply and demand table by MAFF does not
include stocks of MA rice. As shown below, stocks of domestic rice have
been reduced over the years, and in 2004 went below the targeted level
due to a poor crop in 2003. In contrast, stocks of MA rice have been
piling up.

  ----------------- -------------- -------------- -------------- --------------
  ***Table 7.***                                                 

  ***Japan\'s Rice                                               
  Reserve***                                                     

  ***(MT)***                                                     

                                                                 

                                   Government                     

                    Commercial     Domestic       MA rice        Total

  1995              370,000        1,180,000      0              1,550,000

  1996              390,000        2,240,000      310,000        2,940,000

  1997              850,000        2,670,000      390,000        3,910,000

  1998              470,000        2,970,000      420,000        3,860,000

  1999              220,000        2,330,000      440,000        2,990,000

  2000              110,000        1,620,000      560,000        2,290,000

  2001              370,000        1,760,000      750,000        2,880,000

  2002              460,000        1,550,000      950,000        2,960,000

  2003              130,000        1,310,000      1,270,000      2,710,000

  2004              20,000         570,000        1,480,000      2,070,000

  2005              0              710,000        1,700,000      2,410,000

  Source: Food                                                   
  Department/MAFF                                                
  ----------------- -------------- -------------- -------------- --------------

This is a major issue for MAFF since the storage cost has become
exorbitant. It is also a great concern for the United States because the
stocks are virtually all U.S. rice, some of which are few years old. In
order not to disrupt the supply and demand for domestic rice, MAFF does
not release these stocks. In an effort to reduce the MA stocks, while
not greatly disrupting the supply and demand for domestic rice and
simultaneously curbing imports of rice flour preparations, MAFF started
releasing MA rice stocks for domestic rice flour manufacturers, as
mentioned in the previous section.

In a more grand scheme to write the storage cost off of its books, MAFF
has developed the idea of creating regional stocks with ASEAN nations
plus China and Korea, where each country would contribute a certain
amount of stocks (physically held in each nation) to be used for
shortage or emergency situations in any of the member nations. The plan
for this "East Asia Emergency Rice Reserve (EAERR)" was officially
adopted in October 2002 at the ASEAN Plus 3 agriculture ministerial
meeting, and currently a pilot program is being conducted. For details,
see the EAERR English language website
(<http://www.eaerr.org/index.php>). However, there appears to be little
substantive progress in the multilateral discussion to realize this
plan.

## Minimum Access Commitment Continues into 2006

As a result of the GOJ's tariffication of rice in JFY 2000, the Minimum
Access commitment was reduced to 7.2 percent of total domestic
consumption from non-tariffied rate of 8.0 percent. In terms of volume,
7.2 percent is equivalent to 682,000 MT (milled basis). This volume will
remain in effect until renegotiated. Japan intends to position rice as a
most sensitive item, therefore, to be excluded from the across the board
expansion of tariff rate quotas (TRQs) and tariff capping in the WTO
Doha Round.

  ----------------- --------------- ------------------ --------------- ------------------
  ***Table 8.***                                                       

  ***Japan\'s                                                          
  Market Access                                                        
  Obligations for                                                      
  Rice***                                                              

  ***(MT, Minimum                                                      
  Access as Percent                                                    
  of Domestic Rice                                                     
  Consumption)***                                                      

                                                                       

                    Without                            With            
                    Tariffication                      Tariffication   

                    Volume          Percent of         Volume          Percent of

                                    Domestic                           Domestic
                                    Consumption                        Consumption

  JFY 2000                                                              

  onward            758,000         8.0 percent        682,000         7.2 percent

  Source: MAFF                                                         
  ----------------- --------------- ------------------ --------------- ------------------

## Export of Rice under Food Aid

The Government of Japan sets aside about 200,000 MT of rice under food
aid programs on an annual basis. This amount does not show up in the
export statistics by the Ministry of Finance, which only records exports
of Japanese domestic rice (12,052 MT in the calendar year 2005 which
includes a negligible amount of commercial exports). The discrepancy
between the total food aid exports and the amount recorded in the
official export statistics is considered to be rice imported under the
OMA regime and diverted for food aid exports.

## Japan's Food Self-Sufficiency Ratio Again Stays at 40 percent and GOJ Embarks on New "Food Education" Initiative 

In 2000 MAFF announced a food self-sufficiency target of 45 percent on a
caloric basis by 2010. Japan's self-sufficiency consistently declined
for many years but has remained steady at 40 percent since 1998. With
the rate in 2003 again stalling at 40 percent, MAFF announced earlier
this year that it had given up achieving the target of 45 percent by
2010. But it will continue targeting 45 percent by 2015. In this effort
the government, involving the Ministry of Education, has embarked on a
"Food Education" campaign by legislating the Basic Food Education Law in
2005 to promote the benefits of a traditional Japanese diet and the
concept of "*Chisan Chisho* (Produce locally and consume locally)". In
this context, MAFF developed the Japanese version of the Food Pyramid in
2005. (Please refer to GAIN Report JA5057: Japan's Food Education
Initiatives.)

  ------------------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ --------
  ***Table 9.***                                                                                                

  ***Japan\'s                                                                                                   
  Self-Sufficiency                                                                                              
  Ratio (%)***                                                                                                  

                                                                                                                

                     1960   1975   1985   1990   1995   1996   1997   1998   1999   2000   2001   2002   2003   2004\*

  Rice               96     110    107    100    104    102    99     95     95     95     95     96     95     95

  Wheat              28     4      14     15     7      7      9      9      9      11     11     13     14     14

  Beans              25     9      8      8      5      5      5      5      6      7      7      7      6      6

  Soybeans           11     4      5      5      2      3      3      3      4      5      5      5      4      3

  Vegetables         100    99     95     91     85     86     86     84     83     82     82     83     82     80

  Fruit              90     84     77     63     49     47     53     49     49     44     45     44     44     39

  Meats              90     77     81     70     57     55     56     55     54     52     53     53     54     55

  Beef               95     81     72     51     39     39     36     35     36     34     36     39     39     44

  Eggs               100    97     98     98     96     96     96     96     96     95     96     96     96     95

  Milk/Dairy         86     81     85     78     72     72     71     71     70     68     68     69     69     67
  Products                                                                                                      

  Seafood (for food) 110    100    86     72     59     58     60     57     55     53     53     53     57     55

  Sugar              31     15     33     32     31     28     29     32     31     29     32     34     35     34

  Self-sufficiency                                                                                               

  (Calorie Basis)    73     54     53     48     43     42     41     40     40     40     40     40     40     40

  Self-sufficiency                                                                                               

  (Major Food        80     69     69     67     65     63     62     59     59     60     60     61     60     60
  Grains)                                                                                                       

  Self-sufficiency                                                                                               

  (Major Feed        55     34     27     26     26     25     25     25     24     26     25     25     23     25
  Grains)                                                                                                       

  Self-sufficiency                                                                                               

  (Food + Feed       62     40     31     30     30     29     28     27     27     28     28     28     27     28
  Grains)                                                                                                       

  Source: MAFF                                                                                                  
  ------------------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ --------

![](media/image4.wmf)

## Marketing

As long as the current import and stock regime remains, there will
always be two major constraints to marketing U.S. rice in Japan; 1) the
difficulty of securing a steady supply at a stable price through the SBS
system and 2) MAFF's reluctance to release stocks of OMA rice into the
market. There are over a million metric tons of OMA rice stored in the
government-commissioned warehouses. Without a transparent and regular
release of OMA rice stocks, potential users in the food service and
processing sectors cannot be developed.

Despite a highly restrictive marketing environment, the USA Rice
Federation (USARF) continues to conduct a diligent marketing program.
The development of the "USA Rice Shop Network" launched in 2002, where
individually owned rice shops in major metropolitan areas are selling
U.S. rice all year around, has proven that once U.S. rice is available
on a consistent basis, Japanese consumers buy it repeatedly even at
similar prices to Japanese domestic rice (the price of U.S. rice is
significantly raised through the SBS system). In 2006, the USARF will be
embarking on food service and Home Meal Replacement promotions by
holding a creative U.S. rice *sushi* recipe contest, entitled
"California-Style Sushi Master Contest," targeting professional chefs
and recipe creators.

# WHEAT

## Production in 2005 up 2 Percent 

The total planted area for wheat in 2005 increased slightly from 212,600
hectares in 2004 to 213,500 hectares in 2005. Due to a higher yield, the
overall production increased by two percent from 859,900 MT in 2004 to
877,400 MT in 2005. The major production area of Hokkaido, however, saw
a drop in production, due to a lower yield caused by dry weather after
pollination, from 558,200 MT in 2004 to 540,100 MT in 2005.

  --------------- ---------------------- ------------------- -------------------
  ***Table 10.***                                            

  ***Japan\'s                                                
  Wheat                                                      
  Production***                                              

                                                             

                  Planted Area           Production          Yield

                  (hectares)             (MT)                (MT/ha)

  2001            196,900                699,900             3.55

  2002            206,900                827,800             4.00

  2003            212,200                855,200             4.03

  2004            212,600                859,900             4.04

  2005            213,500                877,400             4.11

  Source: MAFF                                               
  --------------- ---------------------- ------------------- -------------------

## New Subsidy Scheme Announced

In October 2005, MAFF announced the outline of a new farm subsidy
program that departs from the current commodity-specific support given
to practically all farmers and calls for direct payments targeting
larger scale farmers. Following drafting of the necessary legislation in
JFY 2006, the new scheme is scheduled to commence in JFY 2007. (Please
refer to GAIN report JA5068: Japan Embarks on a Drastic Change in its
Farm Subsidy Scheme.)

The core feature of the direct payment is to fill the cost/price gap
between specific domestic farm products and imports. Wheat (as well as
barley) is one of the most important commodities targeted in the new
scheme. In the announced plan, farmers who meet certain criteria, such
as cultivating more than a certain acreage, will receive a set amount of
direct payments. For wheat, the tentative amount discussed is 40,200 yen
per 10 ares (approximately 1,377 U.S. Dollars per acre).

While MAFF's goal is to encourage the upward trend in wheat production
through the use of this direct payment, it is difficult to forecast at
this point whether the new program will be successful or not. An
expansion of domestic wheat production will ultimately depend on whether
or not Japanese producers will be able to produce wheat that is
acceptable to end-users in quality which is currently evaluated by
Japanese flour millers as much inferior to imported wheat.

In the interim, Post projects that the current level of production is
near the ceiling of what the market can absorb with the current level of
price support. In 2006, Post forecasts that the planted acreage will
further increase but production may decline slightly if the yield
returns to a normal year level.

## Wheat Consumption Stays Flat

Wheat consumption had been gradually increasing as consumers shifted
from rice to processed wheat products such as bread and pasta. However,
consumption has been flat since 2000, stemming from Japan's depressed
economy. In 2003/04, wheat consumption increased slightly as the overall
downward trend was temporarily offset due to the higher price of rice
caused by a short crop. As projected last year, consumption in 2004/05
went back to the 2001/02 level. In the long term, considering the
growing size of the elderly population, who tend to eat more traditional
foods, it is expected that consumption will continue to decline slowly.

  ------------------- ------- ------- ------- ------- ------- ------ ------- ------- --------
  ***Table 11.***                                                                    

  ***Per Capita                                                                      
  Consumption of                                                                     
  Wheat in Japan***                                                                  

  ***(Kilograms)***                                                                  

                                                                                     

  1985                1997    1998    1999    2000    2001    2002   2003    2004    2005\*

  31.7                32.4    32.2    32.4    32.6    32.1    31.9   32.6    32.3    32.0

  Source: MAFF                                                                       

  \* Ag Office                                                                       
  estimate                                                                           
  ------------------- ------- ------- ------- ------- ------- ------ ------- ------- --------

## Utilization Patterns

In 2004 production of wheat based products stayed at the level in 2003,
following a slight increase in 2003 due to increased production in
anticipation of increased demand in 2004, expected from a poor rice
crop. Wheat consumption did increase slightly in 2003/04 as mentioned in
the previous section, but this was a temporary trend. Domestic
production of selected wheat products is estimated to be flat or decline
slightly in coming years as Japan's demography changes.

As a more visible threat, flour millers continue having to compete with
increasing imports of premixes (flour preparations) and semi-finished or
finished products such as frozen dough (see Table 15 in the following
trade section.). As a side note, MAFF is aggressively promoting use of
rice flours in bread and other products in an effort to develop new
demand for over-produced rice. Post expects the impact of this on wheat
flour consumption on the macro basis is minimal.

## 

  ------------------- --------- --------- --------- ---------- ----------
  ***Table 12.***                                              

  ***Japanese                                                  
  Production of                                                
  Selected Wheat                                               
  Products***                                                  

  ***(1,000 MT)***                                             

                                                               

                      2001      2002      2003      2004       2005\*

  Wheat Flour         4,607     4,591     4,662     4,667      4,620

  Bread               1,272     1,245     1,247     1,243      1,230

  Noodles             1,441     1,423     1,425     1,414      1,410

  Biscuit             218       210       219       214        215

  Premix              353       347       352       365        360

  \* Ag Office                                                 
  Estimate                                                     

  Source: MAFF                                                 
  ------------------- --------- --------- --------- ---------- ----------

## 

## Government Resale Price for 2006 Lowered Again

MAFF controls both producer and resale prices of both domestic and
imported wheat. MAFF buys imported wheat at international prices and
sells it to domestic flour millers at higher prices. As shown in Table
13 below, the ratio in recent years has been consistent at 2.0, which
means MAFF sells imported wheat at twice the purchase price. The table
shows that the 2006 resale price for U.S. Western White was lowered by
0.8 percent from 2005. On the other hand, MAFF buys domestic wheat at a
high price and sells it to domestic flour millers at a significantly
lower price, lower than imported wheat so that the lower quality
domestic wheat will be accepted. Revenues from transactions for imported
wheat are used to help cover the cost difference between the purchase
and resale of domestic wheat. This is referred to as the "Cost Pool
System".

Although this current state trading regime will likely be maintained in
the foreseeable future, along with the introduction of a new direct
payment scheme explained in the previous section, MAFF plans to
introduce the Simultaneous Buy and Sell (SBS) system, as done for rice
and feed wheat/barley. The idea is to separate certain specialty
types/varieties like durum from the state purchase and set them aside
for the SBS tenders where flour millers would be able to have an
opportunity to directly purchase the product they like directly from
suppliers they choose. The decision to actually introduce the SBS system
should be made in early JFY 2006, followed by discussion of details,
such as the types of wheat, quantities, and tender methods. If
everything progresses without stalling, it can be implemented as early
as JFY 2007. However, the total amount set aside for the SBS tender is
expected to be very limited.

  -------------- -------------------- -------------------- --------------
  ***Table                                                 
  13.***                                                   

  ***GOJ                                                   
  Purchase and                                             
  Resale Price                                             
  of U.S.                                                  
  Wheat***                                                 

  ***(Yen per                                              
  MT)***                                                   

                                                           

                 Average CIF          Resale                

                 Price\* (a)          Price\*\* (b)        (b)/(a)

  2002           23,183               45,790               2.0

  2003           22,855               45,790               2.0

  2004           22,923               45,560               2.0

  2005           21,306               45,350               2.1

  2006           NA                   44,970               NA

  \*US Wheat (HS                                           
  Code:                                                    
  100190019)                                               

  \*US Western                                             
  White II                                                 

  Source: MAFF                                             
  and Ministry                                             
  of Finance                                               

  The price                                                
  includes 5%                                              
  consumption                                              
  tax.                                                     
  -------------- -------------------- -------------------- --------------

## Wheat Imports Stay Strong in 2005 

Total imports of wheat in calendar year (CY) 2005 stayed strong at
5,472,347 MT. This is in line with the average over the last several
years of 5.5 million MT. Over the medium term, however, increased
imports of processed products will continue to reduce import demand for
wheat. The U.S. share of total imports in 2005 was maintained at the
previous year's level of 56-57 percent.

  ------------- ------------- -------- ------------- ----------- -----------
  ***Table                                                       
  14.***                                                         

  ***Japanese                                                    
  Wheat Imports                                                  
  by Source***                                                   

  ***(MT)***                                                     

                                                                 

  Year          U.S.          Share    Canada        Australia   TOTAL

  CY 2003       2,983,496     56.9%    1,069,828     1,167,656   5,246,121

  CY 2004       3,069,086     55.9%    1,162,371     1,216,749   5,490,227

  CY 2005       3,102,469     56.7%    1,243,055     1,107,053   5,472,347

  Source:                                                        
  Ministry of                                                    
  Finance                                                        
  ------------- ------------- -------- ------------- ----------- -----------

  ------------------- --------- -------- --------- -------- --------- --------
  ***Table 15.***                                                     

  ***Japanese Imports                                                 
  of Processed Wheat                                                  
  Products***                                                         

  ***(MT)***                                                          

                                                                      

                      CY 2003            CY 2004            CY 2005   

                      Total     US Share Total     US Share Total     US Share

  Flour preparations  132,603   7.3%     136,256   6.7%     139,798   6.2%

  Pasta (excl.        107,838   19.5%    111,527   20.3%    109,606   20.5%
  stuffed)                                                            

  Biscuits            20,647    11.5%    25,182    9.9%     23,942    8.5%

  Bread               7,944     38.6%    9,052     41.4%    9,500     37.9%

  Source: Ministry of                                                 
  Finance                                                             
  ------------------- --------- -------- --------- -------- --------- --------

MAFF allows flour millers to import wheat outside of MAFF's control as
long as they export an equivalent amount of wheat flour. This so-called
"free wheat" is imported at world prices (less than half of MAFF's
resale price) and is thus very profitable. This system also provides
millers with an export market for their lower quality flour, which
otherwise would have little value in the domestic market.

  ------------------------------ ------------ ------------ --------------
  ***Table 16.***                                          

  ***Japanese Exports of Wheat                             
  Flour by Destination***                                  

  ***(MT)***                                               

                                                           

  Destination                    CY 2003      CY 2004      CY 2005

  Hong Kong                      195,051      189,882      186,806

  Vietnam                        46,593       45,171       35,805

  Singapore                      38,537       30,878       28,320

  Thailand                       15,301       16,076       15,741

  United States                  623          587          705

  Other                          22,595       21,819       22,533

  Total                          318,700      304,413      289,910

  Source: Ministry of Finance                              
  ------------------------------ ------------ ------------ --------------

## Stocks

Japan has held emergency stocks of wheat at the level equivalent to 2.6
months' worth of demand. Due to the shortened time necessary to obtain
alternative supplies in case of an emergency, the stocks have been
reduced to 2.3 months' worth as of the end JFY 2005. Although the actual
stock figures are not disclosed, it is calculated to be around 1.06
million metric tons.

## Feed Wheat Imports through SBS System

In 1999, MAFF introduced the Simultaneous Buy and Sell (SBS) system for
imported wheat and barley for feed use. During JFY 2005, MAFF conducted
five SBS tenders, through which 89,935 MT of imported wheat was
contracted. In 2002 and 2003 Japan purchased a small amount of Ukrainian
wheat but discontinued that in 2004. Although it continues to purchase a
small amount of Chinese wheat, in the near future Post does not see a
significant advance by these low cost producers.

  --------------------------- ----------------- ------------------------ --
  ***Table 17.***                                                        

  ***SBS Imports of Feed                                                 
  Wheat and Barley***                                                    

  ***(MT)***                                                             

                                                                         

                              Wheat             Barley                   

  1st tender                  17,720            200,000                  

  2nd                         18,710            190,000                  

  3rd                         16,280            190,000                  

  4th                         18,705            200,000                  

  5th                         18,520            220,000                  

  Total                       89,935            1,000,000                

  Source: MAFF                                                           
  --------------------------- ----------------- ------------------------ --

## Marketing

The US Wheat Associates (USWA) has been a diligent and effective liaison
between the Japanese trade and U.S. industry, conducting activities to
maintain and enhance trade relationships. In order to further develop
market potential for U.S. wheat, it has embarked on cultivating users of
U.S. durum wheat. A reverse trade mission was conducted in 2004 for this
particular purpose, and received a good reaction from the participants.
The second mission was held in 2005.

# CORN

## Production

Corn production is negligible in Japan.

## Overall Corn Demand Stable; Stagnant Feed Demand Offset by Increased Food Use

It was logically expected that the prolonged import ban of U.S. beef and
beef products would lead to some build up of domestic cattle herd to
take advantage of the lack of imports. This did not happen since the
lack of U.S. beef imports was filled by imports from other countries,
mostly Australia. Since the tight supply pushed up beef prices, some
replacement demand has gone to chicken and pork, but again, resulted in
increased imports of chicken and pork, not increased domestic
production.

With the outbreak of avian influenza (AI) in Japan, first detected in
February 2004, continuing, domestic poultry producers have become
hesitant to build up the broiler/layer population. Therefore, overall
feed demand was stagnant in 2005. While there is no change in the
overall declining trend in Japan's livestock population over the years,
with so many unknowns in animal health/quarantine issues at this point,
it is extremely difficult to make any long-term forecast.

  --------------- --------- --------- --------- --------- --------- ----------- --------------
  ***Table 18.***                                                               

  ***Japanese                                                                   
  Livestock                                                                     
  Population***                                                                 

  ***(1,000                                                                     
  heads)***                                                                     

                                                                                

                  2000      2001      2002      2003      2004      2005        ***%05/00***

  Dairy cows      1,764     1,725     1,726     1,719     1,690     1,655       ***93.8%***

  Beef cattle     2,824     2,806     2,838     2,804     2,788     2,747       ***97.3%***

  Swine           9,806     9,788     9,612     9,725     9,724     9,750\*     ***99.4%***

  Layers          140,365   139,248   137,718   137,272   137,216   136,000\*   ***96.9%***

  Broilers        108,410   106,311   105,658   103,730   104,950   102,521     ***94.6%***

  Source: MAFF                                                                  
  (as of February                                                               
  each year)                                                                    

  \* Ag Office                                                                  
  Estimate                                                                      
  --------------- --------- --------- --------- --------- --------- ----------- --------------

  ----------------------------- -------------- ------------ --------------
  ***Table 19.***                                           

  ***Imports of Meat by                                     
  Origin***                                                 

  ***(1,000 MT)***                                          

                                                            

                                CY 2003        CY 2004      CY 2005

  Beef, fresh/chilled (HS Code:                             
  0201)                                                     

  United States                 114            1            0

  Share                         42.2%          0.0%         0.0%

  Australia                     151            204          223

  Total                         270            208          230

  Beef, frozen (HS Code: 0202)                              

  United States                 153            1            0

  Share                         50.1%          0.0%         0.0%

  Australia                     133            191          188

  Total                         306            224          230

  Pork, fresh/chilled/frozen                                
  (HS Code: 0203)                                           

  United States                 245            256          288

  Share                         32.6%          29.6%        33.0%

  Denmark                       220            268          231

  Canada                        167            185          195

  Total                         753            864          873

  Poultry, fresh/chilled/frozen                             
  (HS Code: 0207)                                           

  United States                 48             31           30

  Share                         10.0%          8.5%         7.0%

  China                         64             8            1

  Thailand                      179            13           0

  Brazil                        175            297          380

  Total                         480            360          429

  Source: Ministry of Finance                               
  ----------------------------- -------------- ------------ --------------

## Utilization Patterns

Roughly 70 percent of total demand for corn in Japan comes from the feed
sector, 22 percent from starch manufacturers, and 8 percent from other
food-use sectors including manufacturers of corn grits (used as a
fermentation ingredient in liquors), cornflakes and confections.

Corn is the major ingredient used in compound and mixed feed. The
ingredient ratio is adjusted from year-to-year, depending on prices of
various grains, but the corn ratio has been fairly constant at 48--50
percent in recent years. Of the total demand for corn, about 44-45
percent comes from the poultry sector.

![](media/image5.wmf)

  ------------- --------------- ----------- -------- --------- --------- --------- --------- -------- --------- ------------ ------------- ------------
  ***Table                                                                                                                                 
  20.***                                                                                                                                   

  ***Feed                                                                                                                                  
  Utilization                                                                                                                              
  by                                                                                                                                       
  Ingredients                                                                                                                              
  2004***                                                                                                                                  

                                                                                                                                           

                                                                         Wheat                        Other     Grain        Other          

                Corn            Sorghum     Wheat    Barley    Rice      Flour     Rye       Oats     Grains    Total        Ingredients   Total

  Layer Feed                                                                                                                                

  MT            3,646,520       104,250     150      79        70,030    1,426     2         0        3,161     3,825,618    2,676,332     6,501,950

  \%            56.1%           1.6%        0.0%     0.0%      1.1%      0.0%      0.0%      0.0%     0.0%      58.8%        41.2%         100.0%

  Broiler Feed                                                                                                                              

  MT            1,547,339       660,709     3,691    1,429     84,753    3,538     100       0        5,825     2,307,384    1,304,970     3,612,354

  \%            42.8%           18.3%       0.1%     0.0%      2.3%      0.1%      0.0%      0.0%     0.2%      63.9%        36.1%         100.0%

  Poultry Total                                                                                                                             

  MT            5,193,859       764,959     3,841    1,508     154,783   4,964     102       0        8,986     6,133,002    3,981,302     10,114,304

  \%            51.4%           7.6%        0.0%     0.0%      1.5%      0.0%      0.0%      0.0%     0.1%      60.6%        39.4%         100.0%

  Dairy Cattle                                                                                                                              

  MT            1,364,326       35,984      12,056   64,648    33,468    25,322    73,875    7,389    11,827    1,628,895    1,634,458     3,263,353

  \%            41.8%           1.1%        0.4%     2.0%      1.0%      0.8%      2.3%      0.2%     0.4%      49.9%        50.1%         100.0%

  Beef Cattle                                                                                                                               

  MT            1,615,794       89,973      33,213   635,747   11,290    41,576    43,950    4,721    10,805    2,487,069    1,558,797     4,045,866

  \%            39.9%           2.2%        0.8%     15.7%     0.3%      1.0%      1.1%      0.1%     0.3%      61.5%        38.5%         100.0%

  Cattle Feed                                                                                                                               
  Total                                                                                                                                    

  MT            2,980,120       125,957     45,269   700,395   44,758    66,898    117,825   12,110   22,632    4,115,964    3,193,255     7,309,219

  \%            40.8%           1.7%        0.6%     9.6%      0.6%      0.9%      1.6%      0.2%     0.3%      56.3%        43.7%         100.0%

  Swine Feed                                                                                                                                

  MT            3,258,831       497,017     36,557   56,340    85,864    53,323    137,966   19       67,706    4,193,623    1,727,367     5,920,990

  \%            55.0%           8.4%        0.6%     1.0%      1.5%      0.9%      2.3%      0.0%     1.1%      70.8%        29.2%         100.0%

  Feed, other                                                                                                                               

  MT            36,087          3,554       45       222       501       769       22        735      256       42,191       39,574        81,765

  \%            44.1%           4.3%        0.1%     0.3%      0.6%      0.9%      0.0%      0.9%     0.3%      51.6%        48.4%         100.0%

  Compound Feed                                                                                                                             
  Total                                                                                                                                    

  MT            11,468,897      1,391,487   85,712   758,465   285,906   125,954   255,915   12,864   99,580    14,484,780   8,941,498     23,426,278

  \%            49.0%           5.9%        0.4%     3.2%      1.2%      0.5%      1.1%      0.1%     0.4%      61.8%        38.2%         100.0%

  Mixed Feed                                                                                                                                

  MT            384,451         4,262       4,594    12,456    26        1,428     3,527     2,245    8,710     421,699      121,380       543,079

  \%            70.8%           0.8%        0.8%     2.3%      0.0%      0.3%      0.6%      0.4%     1.6%      77.6%        22.4%         100.0%

  Feed Total                                                                                                                                

  MT            11,853,348      1,395,749   90,306   770,921   285,932   127,382   259,442   15,109   108,290   14,906,479   9,062,878     23,969,357

  \%            49.5%           5.8%        0.4%     3.2%      1.2%      0.5%      1.1%      0.1%     0.5%      62.2%        37.8%         100.0%

                Source: Feed                                                                                                               
                Supply                                                                                                                     
                Stabilization                                                                                                              
                Organization                                                                                                               
  ------------- --------------- ----------- -------- --------- --------- --------- --------- -------- --------- ------------ ------------- ------------

## 

## Production of Feed Likely to Stay Flat in 2005/06 while Strong Food Demand Expected to Continue 

Following a temporary small increase in 2002/03 due to the post-BSE
cattle feed demand (Japan's first BSE was detected in September 2001.)
and increase in swine population, the total production of compound feed
has since returned to a declining path. In JFY 2005/06, Post projects
that feed demand will stay flat or decline slightly.

On the other hand, primarily due to a strong beverage demand for corn
sweeteners, a robust demand for food corn is expected to continue. In
the long term, the downward trend in livestock population appears
irreversible (see Table 18.) and feed demand in Japan is expected to
decline slowly but surely. The future of corn demand in Japan relies
heavily on demand enhancement and development in the non-feed sector.
Practically all food corn users in Japan still require non-biotech and
therefore U.S. suppliers are expected to use the IP system to assure
their customers this requirement is met.

  --------------- ---------- -------- -------- ------------ -------- ----------
  ***Table 21.***                                                    

  ***Japanese                                                        
  Compound and                                                       
  Mixed Feed                                                         
  Production by                                                      
  Type of                                                            
  Animal***                                                          

  ***(1,000                                                          
  MT)***                                                             

                                                                     

                  Compound                                  Mixed    Grand-
                  Feed                                               

                  Poultry    Swine    Cattle   Subtotal\*   Feed     Total

  JFY 2001        10,312     5,856    7,114    23,364       735      24,099

  JFY 2002        10,500     5,960    7,175    23,722       692      24,414

  JFY 2003        10,491     6,059    7,329    23,968       634      24,602

  JFY 2004        10,067     5,919    7,302    23,370       547      23,916

  JFY 2005\*      10,050     6,050    7,200    23,300       520      23,820

  \* Includes                                                        
  feed for other                                                     
  livestock                                                          
  animals                                                            

  \*\* Ag Office                                                     
  preliminary                                                        
  estimates                                                          

  Source: MAFF                                                       
  --------------- ---------- -------- -------- ------------ -------- ----------

## Prices

The cost of imported corn jumped significantly in 2004, reflecting
higher export prices and sky rocketed trans-Pacific freight rates. The
cost in 2005 declined but still remains at a high level.

  ------------------- ------------ ------------ ------------ --------------
  ***Table 22.***                                            

  ***Average CIF                                             
  Price of Corn for                                          
  Feed by Origin***                                          

  ***(\$US per MT)***                                        

                                                             

                      CY 2003      CY 2004      CY 2005      ***%05/04***

  United States       138.0        175.8        151.2        ***86.0%***

  Argentina           136.9        NA           145.5        ***NA***

  China               130.2        174.2        152.5        ***87.5%***

  Brazil              141.7        173.0        NA           ***NA***

  Source: Ministry of                                        
  Finance                                                    
  ------------------- ------------ ------------ ------------ --------------

## 

## Trade Returns to U.S. as Starlink Issue Diminishes, but Aflatoxin Concern Arises

Feed corn imports in 2005 were down due to the stagnant demand situation
described in the previous section.

Food corn imports increased again in CY 2005 due to an aggregate demand
increase in the beverage sector, particularly for high fructose corn
syrup (HFCS) used in low alcoholic drinks like *happoshu* (light beer)
and other alcoholic beverages, reflecting increased popularity for these
drinks in addition to a continued strong demand for soft drinks. Since
China continues to struggle in gathering exportable supplies, the United
States share in the food corn imports increased. Supporting factors
include StarLink monitoring showing zero detection continually and
diligent efforts by the U.S. industry to educate Japanese users about
its rigorous Identity Preserved (IP) handling program.

Therefore, the increase in food corn imports offset the decline in feed
corn imports for CY 2005. Looking at the marketing year (MY) imports
(October 2004 -- September 2005) total corn imports declined 1.8 percent
from the previous year, but imports from the United States increased by
1.3 percent.

While the StarLink issue is diminishing, detection of aflatoxin in U.S.
food corn has caused serious concern among the Japanese trade. Since
December 21, 2005 to date, 20 lots have been detected with above
tolerance level (10 ppb) for aflatoxin B1. Post has been coordinating
closely with the U.S. Grains Council and communicating with the Japanese
trade organizations in order to address their concerns.

  ----------------------------- -------------- -------------- -------------
  ***Table 23.***                                             

  ***Imports of Corn by                                       
  Origin***                                                   

  ***(1,000 MT)***                                            

                                                              

                                CY 2003        CY 2004        CY 2005

  Corn for feed                                                

  United States                 11,659         11,587         10,258

  Share                         92.8%          96.3%          93.5%

  Argentina                     292            0              55

  China                         605            445            638

  Brazil                        10             4              0

  Others                        0              0              15

  Total                         12,566         12,035         10,966

  Corn for manufacturing                                       

  United States                 3,582          4,090          5,422

  Share                         79.7%          92.1%          95.3%

  Argentina                     147            12             4

  Australia                     3              3              2

  China                         546            234            150

  South Africa                  21             6              101

  Brazil                        184            87             0

  Others                        11             10             10

  Total                         4,496          4,443          5,689

  Total corn                                                   

  United States                 15,241         15,677         15,680

  Share                         89.3%          95.1%          94.1%

  Total                         17,062         16,478         16,656

  Source: Ministry of Finance                                 
  ----------------------------- -------------- -------------- -------------

## Stocks 

Japan holds emergency stocks of essential feed grains, i.e. corn,
sorghum, and barley. For over a decade until 2003, the stock level was
set at approximately 630,000-670,000 MT, 130,000-170,000 MT and
390,000-400,000 MT respectively for the total of three grains fixed at
1,200,000 MT. In the scheme of regulatory reforms and downsizing of
government expenditures, since 2003 the stock size has been reduced to
1,000,000 MT in 2003 and 950,000 MT in 2004. It was maintained at the
same level in 2005. The breakdown is 535,000 MT for corn, 65,000 MT for
sorghum and 350,000 MT for barley.

## Government Stocks Released to Ease Impact of Hurricane Katrina

Shortly following the hurricane, MAFF announced that it would release
the government stocks of corn/sorghum and barley on loan (i.e.
recipients are required to return the same amount to the government at a
later date). The set-aside volume was 300,000 MT for corn and sorghum
combined and 100,000 MT for barley. As a result, although no request for
barley was made, about half of the set-aside amount of corn/sorghum was
released (145,600 MT to be exact). The impact of this devastating
hurricane on the grain trade was greatly alleviated by tremendous
efforts by all parties involved.

## Marketing

With traditional markets for coarse grains expected to decline as
Japan's domestic livestock production contracts, the U.S. Grains Council
(USGC) continues to explore markets for "new use" products featuring
Value Enhanced Grains (VEG) such as high oil corn. It held a symposium
featuring experts from the U.S. in February 2005 in Tokyo and Osaka
gathering over 100 key wet and dry millers, food manufacturers and
traders. This was followed by a reverse trade mission in September 2005
where Japanese corn processors visited IP handling facilities and farms
in the U.S. Promoting VEG aims at increasing the total monetary value of
coarse grains exported to Japan, offsetting the forecast decline in
export volume with a long-term perspective.

In addition, USGC continues to play a pivotal role in maintaining and
enhancing the Japanese trade confidence in U.S. corn, e.g. IP handling
system. Looking further into the future, USGC is also educating Japanese
trade about the use of corn in ethanol production as well as in
biomaterials.

# SORGHUM

## Production

Like corn, production of sorghum is negligible in Japan.

## Consumption

Sorghum is a substitute for corn in the production of compound and mixed
feeds. Therefore, the utilization rate for sorghum in these feeds
fluctuates depending on its relative price to corn and other
ingredients. In the last few years, the ratio had been declining due to
an increase in its price. In JFY 2004, the most recent year with
confirmed statistics, the sorghum utilization ratio went down to 5.8
percent from 7.6 percent in 2001, is and expected to stay flat or
slightly decline again in 2005/06 since the import price is still not
advantageous over corn.

## 

## Prices 

CIF prices for sorghum continued to rise until 2004 and went down in
2005. The U.S. sorghum price was attractive over Australia, the second
largest supplier to Japan after the U.S.

  ------------------------- ---------- ---------- ------------ --------------
  ***Table 24.***                                              

  ***Average CIF Price of                                      
  Sorghum for Feed by                                          
  Origin***                                                    

  ***(\$US per MT)***                                          

                                                               

                            CY 2003    CY 2004    CY 2005      ***%05/04***

  United States             143.7      168.5      155.1        ***92.0%***

  Argentina                 124.3      NA         122.5        ***NA***

  Australia                 150.4      190.7      173.6        ***91.0%***

  China                     143.7      162.8      NA           ***NA***

  Source: Ministry of                                          
  Finance                                                      
  ------------------------- ---------- ---------- ------------ --------------

## Trade

The U.S. is the largest supplier of sorghum to Japan. Since sorghum is
mainly a substitute for corn, its potential growth in imports largely
depends on its relative price to corn, which did not change
significantly in 2004 and 2005. Overall imports, thus, stayed flat in
2005. Due to absence of competition with Australia (having little
exportable supply) and China (where the price of sorghum soared due to
domestic demand), U.S. imports dominated in 2005, with the share
exceeding 80 percent. This situation is expected to continue into 2006.

  ----------------------------- ------------ -------------- --------------
  ***Table 25.***                                           

  ***Imports of Sorghum by                                  
  Origin***                                                 

  ***(1,000 MT)***                                          

                                                            

                                CY 2003      CY 2004        CY 2005

  Sorghum for feed                                           

  United States                 942          696            991

  Share                         73.3%        55.4%          88.2%

  Argentina                     270          0              0

  Australia                     16           418            80

  China                         56           118            0

  Total                         1,285        1,256          1,123

  Sorghum, others                                            

  United States                 102          69             234

  Share                         51.0%        46.9%          83.3%

  Argentina                     89           0              6

  Australia                     1            72             41

  China                         8            4              0

  Others                        0            2              0

  Total                         200          147            281

  Total sorghum                                              

  United States                 1,044        765            1,224

  Share                         70.3%        54.5%          87.2%

  Total                         1,485        1,403          1,404

  Source: Ministry of Finance                               
  ----------------------------- ------------ -------------- --------------

## Stocks

As written in the previous CORN section, Japan holds emergency stocks of
essential feed grains, i.e. corn, sorghum, and barley. The stocks of
sorghum had been kept at 130,000-170,000 MT over a decade until 2003.
With the policy to reduce the overall feed grain stocks, sorghum stocks
were reduced to 75,000 MT in 2003, to 66,000 MT in 2004, and 65,000 MT
in 2005.

## Marketing

The U.S. Grains Council (USGC) has been conducting a trade education
program to promote sorghum, particularly for food use, in Japan. In this
effort USGC organized a trade mission in July 2005 for U.S. producers to
learn about the Japanese market needs firsthand.

# BARLEY

## Production

According to MAFF's survey for the 2005 barley crop, although the yield
was slightly better than 2004, production declined by 5.7 percent due to
a decline in the crop area by 8.4 percent. Since over 90 percent of the
total barley production area is on converted rice paddy land, production
of barley is strongly affected by the rice policy and its reform.
Therefore, this year's reduction in the crop area indicates more rice
farmers chose to produce rice instead of barley. (Note the increase in
rice planted area in *Table 1* in the RICE section.) The new direct
payment program, explained in the WHEAT section, will also target
barley.

Once the new scheme is finalized and implemented in JFY 2007, it may
encourage permanent production of barley, not merely as an alternative
crop to rice. It is difficult to make medium term projections without
evaluating the impact of this new subsidy program, once implemented, as
well as the success of the rice policy reform to be completed by JFY
2008. In the interim, Post does not expect a major change in either in
crop area or production volume in 2006/07, given a normal yield.

  ------------ --------------------- ----------------------- --------------
  ***Table                                                   
  26.***                                                     

  ***Crop Area                                               
  and                                                        
  Production                                                 
  of Barley in                                               
  Japan***                                                   

                                                             

               Crop Area             Production              

               (hectares)            (MT)                    

  2001         60,540                206,400                 

  2002         64,490                217,200                 

  2003         63,600                198,500                 

  2004         59,860                195,600                 

  2005         54,840                184,500                 

  Source: MAFF                                               
  ------------ --------------------- ----------------------- --------------

## Consumption

In Japan, over 80 percent of the total domestic consumption of barley is
used for compound and mixed feed production for the cattle sector (beef
and dairy). Barley is particularly important in feeding beef cattle
because it produces high quality beef with the white marbling Japanese
consumers favor. The largest non-feed uses are for the production of
*shochu*, a traditionally distilled liquor, and beer. Other uses include
*miso* (soybean paste) and barley tea. Consumption of barley has been
constant at around 1.65 million MT since 2001, and there is no
indication that it will change significantly in the near future.

## Prices

After reaching record high levels in 1996, the average CIF price of
barley declined until 1999, rebounded in 2000 and has been hovering at
high levels since. The U.S. CIF price dropped in 2004 but rebounded in
2005.

  ------------------- ------------ ------------ ------------ --------------
  ***Table 27.***                                            

  ***Average CIF                                             
  Prices of Barley                                           
  for Feed by                                                
  Origin***                                                  

  ***(\$US per MT)***                                        

                                                             

                      CY 2003      CY 2004      CY 2005      ***%05/04***

  United States       169.8        161.3        167.1        ***103.6%***

  Canada              164.0        175.4        163.3        ***93.1%***

  Australia           172.0        166.1        179.9        ***108.3%***

  Ukraine             143.3        235.3        NA           ***NA***

  Source: Ministry of                                        
  Finance                                                    
  ------------------- ------------ ------------ ------------ --------------

## Trade

Along with rice and wheat, barley imports are controlled by MAFF as a
"Staple Food". In fact, in the Japanese language wheat and barley are
both called "*mugi*" where wheat is "*ko-mugi*" or small-*mug*i and
barley is "*oh-mugi*" or big-*mugi*. Even though the import system for
barley mimics the free market principle fairly closely, MAFF is hesitant
to remove barley from the state system because it is a strategic
alternative crop under the rice crop diversion program (see GAIN Report,
#JA3058, Grain and Feed -- Japan's Barley Policy, 8/22/03.)

Due to tight supplies and higher prices from traditional suppliers,
Japan imported a small amount of barley from the Ukraine in 2002 for the
first time in many years. In 2003 purchases from the Ukraine increased
and Germany also emerged as a supplier. The United States also enjoyed a
large increase in exports to Japan in 2003. However, because of a
decline in production in Eastern Europe and a bumper crop in Australia,
imports in 2004 returned to traditional supply sources, and imports from
the United States also took a drop, attributed also to shrunk exportable
supplies in the United State due to a bullish demand from the U.S.
domestic wet-milling sector.

In 2005, contrary to a pessimistic earlier projection by Post, imports
from the U.S. almost doubled. Although this may appear to be a dramatic
increase, on the Marketing Year (MY) basis (October 2004 -- September
2005), the increase rate is 56 percent. This is largely due to a
recovery in U.S. exportable supplies, and not related to major changes
in external factors like competitors' supply capabilities. For 2006,
there will be no significant change in the aggregate demand for imported
barley, i.e. around 1.4 million MT.

  ---------------------------- -------------- -------------- --------------
  ***Table 28..***                                           

  ***Imports of Barley by                                    
  Origin***                                                  

  ***(1,000 MT)***                                           

                                                             

                               CY 2003        CY 2004        CY 2005

  Barley for feed                                             

  United States                406            161            314

  Share                        33.8%          14.2%          27.3%

  Canada                       83             211            265

  Australia                    487            761            568

  Ukraine                      91             20             0

  Germany                      132            0              0

  Others                       2              0              0

  Total                        1,201          1,132          1,147

  Barley, others                                              

  United States                7              0              3

  Share                        2.9%           0.0%           0.0%

  Canada                       21             22             38

  Australia                    212            283            241

  Others                       1              1              1

  Total                        241            307            283

  Total Barley                                                

  United States                413            161            317

  Share                        28.6%          11.2%          22.2%

  Total                        1,442          1,439          1,430

  Source: Ministry of Finance                                
  ---------------------------- -------------- -------------- --------------

## SBS Tender for Feed Barley since 1999

As noted in the WHEAT Section of this report, MAFF introduced the
Simultaneous Buy and Sell (SBS) system for barley for feed in JFY 1999.
During JFY 1999, 359,940 MT of feed barley was contracted under three
tenders. The amount had been raised every year to 850,000 MT in JFY
2002, remained at that level for 2003, and was raised in JFY 2004 to
900,000 MT, then to 1,000,000 MT in 2005 under five tenders.

  --------------------------- ----------------- ------------------------ --
  ***Table 29.***                                                        

  ***SBS Imports of Feed                                                 
  Wheat and Barley***                                                    

  ***(MT)***                                                             

                                                                         

                              Wheat             Barley                   

  1st tender                  17,720            200,000                  

  2^nd^                       18,710            190,000                  

  3^rd^                       16,280            190,000                  

  4^th^                       18,705            200,000                  

  5^th^                       18,520            220,000                  

  Total                       89,935            1,000,000                

  Source: MAFF                                                           
  --------------------------- ----------------- ------------------------ --

## Stocks

As written in the previous CORN and SORGHUM sections, Japan holds
emergency stocks of essential feed grains, i.e. corn, sorghum, and
barley. The stocks of barley had been kept at 390,000-400,000 MT over a
decade until 2003. With the policy to reduce the overall feed grain
stocks, barley stocks were reduced to 350,000 MT in 2003 and kept at the
same level in 2004 and 2005.

## Marketing

As the majority of barley is purchased through the SBS tenders, the U.S.
Grains Council organized a reverse trade mission in August 2005 for
Japanese buyers to obtain the latest information on barley production in
the U.S.

# RYE

## Production

Production of rye is minimal in Japan.

## Consumption

Rye is almost exclusively used for feed in Japan. The main uses of rye
are almost exclusively for cattle feed and swine feed. Since there is
practically no domestic production, annual rye consumption and imports
are directly linked with domestic cattle and swine production. In 2004,
the latest statistics available (Table 20), total rye utilization in
feed was 259,442 MT: 73,875 MT for dairy cattle; 43,950 for beef cattle;
and 137,966 MT for swine.

## Prices

As shown below, U.S. rye is significantly less price competitive than
that of Germany or Canada, the two major suppliers for Japan. Although
the U.S. price dropped significantly in 2005, it is still more than
twice as expensive as Canada or Germany.

  ------------------- ------------ ------------ ------------- --------------
  ***Table 30.***                                             

  ***Average CIF                                              
  Price of Rye by                                             
  Origin***                                                   

  ***(\$US per MT)***                                         

                                                              

                      CY 2003      CY 2004      CY 2005       ***%05/04***

  United States       612.9        620.5        344.3         ***55.5%***

  Canada              156.7        196.6        160.8         ***81.8%***

  Germany             105.0        131.5        143.4         ***109.0%***

  Source: Ministry of                                         
  Finance                                                     
  ------------------- ------------ ------------ ------------- --------------

## Trade 

Germany dominates rye exports to the Japanese market because of its
price competitiveness. Imports in CY 2005 declined slightly due to
stagnant cattle and swine feed demand. As this situation continues into
2006, Post projects that imports in 2006 will remain at the level
between 280,000-300,000 MT. In the medium term, a continued decline is
expected as Japan's cattle and swine populations will likely shrink.

  ---------------------------- -------------- -------------- --------------
  ***Table 31.***                                            

  ***Imports of Rye by                                       
  Origin***                                                  

  ***(MT)***                                                 

                                                             

                               CY 2003        CY 2004        CY 2005

  United States                392            251            879

  Canada                       6,282          98,984         12,272

  Germany                      399,167        157,239        268,531

  Other                        24             31,804         0

  Total                        405,865        288,278        281,682

  Source: Ministry of Finance                                
  ---------------------------- -------------- -------------- --------------

## Stocks

Unlike corn, sorghum and barley, Japan does not hold strategic emergency
stocks of rye. Commercial stocks are estimated to be around 15,000 MT.

# BEANS

## Production

Small red beans (Azuki) and kidney beans account for almost all of
Japan's dry bean production. Production volume of small red beans in
2005 declined 12.8 percent from a good harvest in 2004. This was due to
a decline in the planted area coupled with a slightly dry weather
condition in the major production areas of Hokkaido. The production
volume for kidney beans also declined 5.9 percent with the production
area shrinking by 5.1 percent.

  ------------ ---------------- ---------------- ---------------- ---------------
  ***Table                                                        
  32.***                                                          

  ***Crop Area                                                    
  and                                                             
  Production                                                      
  of Major                                                        
  Beans in                                                        
  Japan***                                                        

                                                                  

               Small Red                         Kidney Beans     
               (Azuki) Beans                                      

               Area (Hectares)  Production (MT)  Area (Hectares)  Production (MT)

  2001         45,700           70,800           13,300           23,800

  2002         42,000           65,900           14,700           34,000

  2003         42,000           58,800           12,800           23,000

  2004         42,600           90,500           11,800           27,300

  2005         38,300           78,900           11,200           25,700

  Source: MAFF                                                    
  ------------ ---------------- ---------------- ---------------- ---------------

## 

## Consumption

Japan's annual bean consumption had been fairly constant at around
230,000 metric tons. However, because the stagnant domestic economy has
negatively affected the demand for traditional Japanese confections (a
major user of beans), bean consumption has been declining to 200,000 --
220,000 MT level in the last few years.

  ----------------- --------- --------- --------- --------- --------- ---------
  ***Table 33.***                                                     

  ***Utilization of                                                   
  Major Beans by                                                      
  Product***                                                          

  ***(Percent)***                                                     

                                                                      

                    Sweet     Candied   Cooked    Fried &   Other     Total

                    Bean      Beans &   Beans     Roasted   (mainly    
                                                            for       

                    Paste     Other               Beans     home use)  
                              Conf.                                   

  Small Red         68.9      12.8      2.4       0.0       15.9      100.0

  Beans                                                                

  Lima &            66.1      10.2      15.6      1.1       7.0       100.0

  Kidney Beans                                                         

  Peas              34.5      9.7       9.2       30.0      16.6      100.0

                                                                       

  Broad Beans       21.8      0.0       10.0      68.2      0.0       100.0

                                                                       

  Beans &           60.9      10.5      9.8       8.0       10.8      100.0

  Peas Total                                                           

  Source:                                                             
  Unofficial                                                          
  estimate by MAFF                                                    
  ----------------- --------- --------- --------- --------- --------- ---------

## Trade

Japan's imports of small red beans and kidney beans combined decreased
from 51,499 MT in 2004 to 37,296 MT in 2005. This was due to a recovered
production of Japanese beans in 2004 and increasing imports of finished
and semi-finished sweet bean paste. Post projects imports in 2006 will
be flat or may recover slightly reflecting the decline in domestic
production in 2005.

  ------------------------------- ------------- ---------- -- -------------
  ***Table 34.***                                             

  ***Japanese Major Bean Imports                              
  by Supplier***                                              

  ***(MT)***                                                  

                                                              

                                  CY 2003       CY 2004       CY 2005

  Small Red Beans                 29,696        33,127        20,744

  China                           26,005        25,282        16,641

  Canada                          1,567         3,635         2,960

  USA                             1,564         1,816         738

  Kidney Beans                    16,485        18,372        16,552

  China                           4,170         4,419         3,358

  Canada                          6,992         8,840         9,277

  USA                             3,167         2,481         1,988

  Peas                            15,955        16,177        15,163

  Canada                          8,807         8,588         8,702

  New Zealand                     1,449         803           1,225

  U.K.                            2,168         3,801         1,695

  USA                             998           832           923

  China                           1,850         1,340         1,663

  Hungary                         378           277           636

  Broad Beans                     7,046         7,882         6,721

  China                           6,173         6,658         5,986

  Other Beans                     33,722        30,576        26,122

  Total                           102,904       106,134       85,302

  Source: Ministry of Finance                                 
  ------------------------------- ------------- ---------- -- -------------

## Policy

With implementation of the Uruguay Round Agreement in JFY 1995, the
quota system for bean imports was replaced by a low tariff rate quota
system. A market access volume of 120,000 MT per annum is maintained
with 10 percent duty applied within the current access volume. With a
shrinking demand, caused mainly by increasing imports of
finished/semi-finished products, particularly sweet bean paste, the
quota has not been fully utilized.

# PS&D {#psd-1}

## Rice PS&D Table

  ------------------ ----------- ----------------- ---------- ----------------- ---------- ----------------- ---------
  **Country**        **Japan**                                                                               

  **Commodity**      **Rice,                                                    (1000                        
                     Milled**                                                   HA)(1000                     
                                                                                MT)                          

                     2004        Revised           2005       Estimate          2006       Forecast          UOM

                     USDA        Post              USDA       Post              USDA       Post              
                     Official    Estimate\[New\]   Official   Estimate\[New\]   Official   Estimate\[New\]   
                     \[Old\]                       \[Old\]                      \[Old\]                      

  **Market Year                  11/2004                      11/2005                      11/2006           MM/YYYY
  Begin**                                                                                                    

  Area Harvested     1701        1701              1680       1706              0          1700              (1000 HA)

  Beginning Stocks   1700        1700              1919       1884              2169       2391              (1000 MT)

  Milled Production  7944        7944              8000       8257              0          7940              (1000 MT)

  Rough Production   10912       10912             10989      11342             0          10907             (1000 MT)

  MILLING RATE       7280        7280              7280       7280              0          7280              (1000 MT)
  (.9999)                                                                                                    

  TOTAL Imports      775         740               700        700               0          650               (1000 MT)

  Jan-Dec Imports    750         662               650        787               0          650               (1000 MT)

  Jan-Dec Import     318         318               0          372               0          350               (1000 MT)
  U.S.                                                                                                       

  TOTAL SUPPLY       10419       10384             10619      10841             2169       10981             (1000 MT)

  TOTAL Exports      200         200               200        200               0          200               (1000 MT)

  Jan-Dec Exports    200         200               200        200               0          200               (1000 MT)

  TOTAL Dom.         8300        8300              8250       8250              0          8200              (1000 MT)
  Consumption                                                                                                

  Ending Stocks      1919        1884              2169       2391              0          2581              (1000 MT)

  TOTAL DISTRIBUTION 10419       10384             10619      10841             0          10981             (1000 MT)
  ------------------ ----------- ----------------- ---------- ----------------- ---------- ----------------- ---------

## 

## Wheat PS&D

  ------------------ ----------- ----------------- ---------- ----------------- ---------- ----------------- ---------
  **PSD Table**                                                                                              

  **Country**        **Japan**                                                                               

  **Commodity**      **Wheat**                                                  (1000                        
                                                                                HA)(1000                     
                                                                                MT)                          

                     2004        Revised           2005       Estimate          2006       Forecast          UOM

                     USDA        Post              USDA       Post              USDA       Post              
                     Official    Estimate\[New\]   Official   Estimate\[New\]   Official   Estimate\[New\]   
                     \[Old\]                       \[Old\]                      \[Old\]                      

  **Market Year                  07/2004                      07/2005                      07/2006           MM/YYYY
  Begin**                                                                                                    

  Area Harvested     212         213               215        214               0          215               (1000 HA)

  Beginning Stocks   1709        1173              1890       1151              2020       1128              (1000 MT)

  Production         860         860               860        877               0          868               (1000 MT)

  TOTAL Mkt. Yr.     5744        5543              5700       5500              0          5500              (1000 MT)
  Imports                                                                                                    

  Jul-Jun Imports    5744        5543              5700       5500              0          5500              (1000 MT)

  Jul-Jun Import     3875        3077              0          3030              0          3030              (1000 MT)
  U.S.                                                                                                       

  TOTAL SUPPLY       8313        7576              8450       7528              2020       7496              (1000 MT)

  TOTAL Mkt. Yr.     423         425               450        420               0          420               (1000 MT)
  Exports                                                                                                    

  Jul-Jun Exports    423         425               450        420               0          420               (1000 MT)

  Feed Dom.          330         330               320        320               0          310               (1000 MT)
  Consumption                                                                                                

  TOTAL Dom.         6000        6000              5980       5980              0          5950              (1000 MT)
  Consumption                                                                                                

  Ending Stocks      1890        1151              2020       1128              0          1126              (1000 MT)

  TOTAL DISTRIBUTION 8313        7576              8450       7528              0          7496              (1000 MT)
  ------------------ ----------- ----------------- ---------- ----------------- ---------- ----------------- ---------

## Corn PS&D Table

  ------------------ ---------- ----------------- ---------- ----------------- ---------- ----------------- ---------
  **Commodity**      **Corn**                                                  (1000                        
                                                                               HA)(1000                     
                                                                               MT)                          

                     2004       Revised           2005       Estimate          2006       Forecast          UOM

                     USDA       Post              USDA       Post              USDA       Post              
                     Official   Estimate\[New\]   Official   Estimate\[New\]   Official   Estimate\[New\]   
                     \[Old\]                      \[Old\]                      \[Old\]                      

  **Market Year                 10/2004                      10/2005                      10/2006           MM/YYYY
  Begin**                                                                                                   

  Area Harvested     1          1                 1          1                 0          1                 (1000 HA)

  Beginning Stocks   1339       1339              1125       1123              1026       824               (1000 MT)

  Production         1          1                 1          1                 0          1                 (1000 MT)

  TOTAL Mkt. Yr.     16485      16483             16500      16300             0          16200             (1000 MT)
  Imports                                                                                                   

  Oct-Sep Imports    16485      16483             16500      16300             0          16200             (1000 MT)

  Oct-Sep Import     15015      15740             0          15450             0          15400             (1000 MT)
  U.S.                                                                                                      

  TOTAL SUPPLY       17825      17823             17626      17424             1026       17025             (1000 MT)

  TOTAL Mkt. Yr.     0          0                 0          0                 0          0                 (1000 MT)
  Exports                                                                                                   

  Oct-Sep Exports    0          0                 0          0                 0          0                 (1000 MT)

  Feed Dom.          12200      12200             12100      12100             0          12000             (1000 MT)
  Consumption                                                                                               

  TOTAL Dom.         16700      16700             16600      16600             0          16500             (1000 MT)
  Consumption                                                                                               

  Ending Stocks      1125       1123              1026       824               0          525               (1000 MT)

  TOTAL DISTRIBUTION 17825      17823             17626      17424             0          17025             (1000 MT)
  ------------------ ---------- ----------------- ---------- ----------------- ---------- ----------------- ---------

## 

## 

## Sorghum PS&D

  ------------------ ------------- ----------------- ---------- ----------------- ---------- ----------------- ---------
  **PSD Table**                                                                                                

  **Country**        **Japan**                                                                                 

  **Commodity**      **Sorghum**                                                  (1000                        
                                                                                  HA)(1000                     
                                                                                  MT)                          

                     2004          Revised           2005       Estimate          2006       Forecast          UOM

                     USDA Official Post              USDA       Post              USDA       Post              
                     \[Old\]       Estimate\[New\]   Official   Estimate\[New\]   Official   Estimate\[New\]   
                                                     \[Old\]                      \[Old\]                      

  **Market Year                    10/2004                      10/2005                      10/2006           MM/YYYY
  Begin**                                                                                                      

  Area Harvested     0             0                 0          0                 0          0                 (1000 HA)

  Beginning Stocks   212           213               186        184               186        144               (1000 MT)

  Production         0             0                 0          0                 0          0                 (1000 MT)

  TOTAL Mkt. Yr.     1374          1371              1350       1350              1          1300              (1000 MT)
  Imports                                                                                                      

  Oct-Sep Imports    1374          1371              1350       1350              0          1300              (1000 MT)

  Oct-Sep Import     1101          1095              0          1080              0          1000              (1000 MT)
  U.S.                                                                                                         

  TOTAL SUPPLY       1586          1584              1536       1534              187        1444              (1000 MT)

  TOTAL Mkt. Yr.     0             0                 0          0                 0          0                 (1000 MT)
  Exports                                                                                                      

  Oct-Sep Exports    0             0                 0          0                 0          0                 (1000 MT)

  Feed Dom.          1400          1400              1350       1390              0          1380              (1000 MT)
  Consumption                                                                                                  

  TOTAL Dom.         1400          1400              1350       1390              0          1380              (1000 MT)
  Consumption                                                                                                  

  Ending Stocks      186           184               186        144               0          64                (1000 MT)

  TOTAL DISTRIBUTION 1586          1584              1536       1534              0          1444              (1000 MT)
  ------------------ ------------- ----------------- ---------- ----------------- ---------- ----------------- ---------

## 

## 

## Barley PS&D

  ------------------ ------------ ----------------- ---------- ----------------- ---------- ----------------- ---------
  **PSD Table**                                                                                               

  **Country**        **Japan**                                                                                

  **Commodity**      **Barley**                                                  (1000                        
                                                                                 HA)(1000                     
                                                                                 MT)                          

                     2004         Revised           2005       Estimate          2006       Forecast          UOM

                     USDA         Post              USDA       Post              USDA       Post              
                     Official     Estimate\[New\]   Official   Estimate\[New\]   Official   Estimate\[New\]   
                     \[Old\]                        \[Old\]                      \[Old\]                      

  **Market Year                   10/2004                      10/2005                      10/2006           MM/YYYY
  Begin**                                                                                                     

  Area Harvested     60           60                60         56                0          50                (1000 HA)

  Beginning Stocks   574          912               642        930               582        865               (1000 MT)

  Production         196          196               190        185               0          165               (1000 MT)

  TOTAL Mkt. Yr.     1522         1522              1400       1400              0          1300              (1000 MT)
  Imports                                                                                                     

  Oct-Sep Imports    1522         1522              1400       1400              0          1300              (1000 MT)

  Oct-Sep Import     0            381               0          350               0          330               (1000 MT)
  U.S.                                                                                                        

  TOTAL SUPPLY       2292         2630              2232       2515              582        2330              (1000 MT)

  TOTAL Mkt. Yr.     0            0                 0          0                 0          0                 (1000 MT)
  Exports                                                                                                     

  Oct-Sep Exports    0            0                 0          0                 0          0                 (1000 MT)

  Feed Dom.          1350         1400              1350       1350              0          1350              (1000 MT)
  Consumption                                                                                                 

  TOTAL Dom.         1650         1700              1650       1650              0          1650              (1000 MT)
  Consumption                                                                                                 

  Ending Stocks      642          930               582        865               0          680               (1000 MT)

  TOTAL DISTRIBUTION 2292         2630              2232       2515              0          2330              (1000 MT)
  ------------------ ------------ ----------------- ---------- ----------------- ---------- ----------------- ---------

## Rye PS&D

  ------------------ ----------- ----------------- ---------- ----------------- ---------- ----------------- ---------
  **PSD Table**                                                                                              

  **Country**        **Japan**                                                                               

  **Commodity**      **Rye**                                                    (1000                        
                                                                                HA)(1000                     
                                                                                MT)                          

                     2004        Revised           2005       Estimate          2006       Forecast          UOM

                     USDA        Post              USDA       Post              USDA       Post              
                     Official    Estimate\[New\]   Official   Estimate\[New\]   Official   Estimate\[New\]   
                     \[Old\]                       \[Old\]                      \[Old\]                      

  **Market Year                  10/2004                      10/2005                      10/2006           MM/YYYY
  Begin**                                                                                                    

  Area Harvested     0           0                 0          0                 0          0                 (1000 HA)

  Beginning Stocks   20          14                20         14                20         19                (1000 MT)

  Production         0           0                 0          0                 0          0                 (1000 MT)

  TOTAL Mkt. Yr.     300         260               150        265               0          250               (1000 MT)
  Imports                                                                                                    

  Oct-Sep Imports    261         260               150        265               0          250               (1000 MT)

  Oct-Sep Import     0           1                 0          0                 0          0                 (1000 MT)
  U.S.                                                                                                       

  TOTAL SUPPLY       320         274               170        279               20         269               (1000 MT)

  TOTAL Mkt. Yr.     0           0                 0          0                 0          0                 (1000 MT)
  Exports                                                                                                    

  Oct-Sep Exports    0           0                 0          0                 0          0                 (1000 MT)

  Feed Dom.          275         260               125        260               0          250               (1000 MT)
  Consumption                                                                                                

  TOTAL Dom.         300         260               150        260               0          250               (1000 MT)
  Consumption                                                                                                

  Ending Stocks      20          14                20         19                0          19                (1000 MT)

  TOTAL DISTRIBUTION 320         274               170        279               0          269               (1000 MT)
  ------------------ ----------- ----------------- ---------- ----------------- ---------- ----------------- ---------

## 

## 

## Beans PS&D

  ------------------ ----------- ----------------- ---------- ----------------- ---------- ----------------- ---------
  **PSD Table**                                                                                              

  **Country**        **Japan**                                                                               

  **Commodity**      **Beans**                                                  (1000                        
                                                                                HA)(1000                     
                                                                                MT)                          

                     2004        Revised           2005       Estimate          2006       Forecast          UOM

                     USDA        Post              USDA       Post              USDA       Post              
                     Official    Estimate\[New\]   Official   Estimate\[New\]   Official   Estimate\[New\]   
                     \[Old\]                       \[Old\]                      \[Old\]                      

  **Market Year                  10/2004                      10/2005                      10/2006           MM/YYYY
  Begin**                                                                                                    

  Area Harvested     0           54                0          50                0          48                (1000 HA)

  Beginning Stocks   0           3                 0          9                 0          2                 (1000 MT)

  Production         0           118               0          105               0          101               (1000 MT)

  TOTAL Mkt. Yr.     0           95                0          92                0          90                (1000 MT)
  Imports                                                                                                    

  Jul-Jun Imports    0           95                0          92                0          90                (1000 MT)

  Jul-Jun Import     0           15                0          14                0          0                 (1000 MT)
  U.S.                                                                                                       

  TOTAL SUPPLY       0           216               0          206               0          193               (1000 MT)

  TOTAL Mkt. Yr.     0           0                 0          0                 0          0                 (1000 MT)
  Exports                                                                                                    

  Jul-Jun Exports    0           0                 0          0                 0          0                 (1000 MT)

  Feed Dom.          0           0                 0          0                 0          0                 (1000 MT)
  Consumption                                                                                                

  TOTAL Dom.         0           207               0          204               0          192               (1000 MT)
  Consumption                                                                                                

  Ending Stocks      0           9                 0          2                 0          1                 (1000 MT)

  TOTAL DISTRIBUTION 0           216               0          206               0          193               (1000 MT)
  ------------------ ----------- ----------------- ---------- ----------------- ---------- ----------------- ---------

##