U.S. corn shipments to top export customer Japan should not be severely disrupted by the major earthquake and subsequent tsunami that hit the country, but the disaster could slow overall Japanese demand.
The operations of several livestock feed manufacturers were hit by the disaster, with several production facilities were reportedly destroyed.
"It's possible that the entire feed production in the area may be halted," one industry source told Reuters in Tokyo.
Other trade sources speculate feed production in northern Japan may be cut by 50% over the next six months. That would reduce Japan’s compound feed production by 1 million metric tons (mmt) during the period and cut corn imports by roughly 500,000 tons (about 19.7 million bushels), a Japanese importer told Dow Jones Newswires.
The region hit by the quake produces roughly 17% of Japan's compound animal feed, according to trade sources. Japan is the world’s top corn importer and the top buyer of U.S. corn. The country bought nearly 15 mmt of U.S. corn in 2009-2010.
So far, grain shipments to Japan have been mostly unaffected, although some delays are anticipated. While at least six Japanese ports sustained major damage from the disaster, most major ports were not significantly damaged.
"Of Japan's some dozen major ports where bulk carriers or tankers can dock, only two are damaged," Nobuyuki Chino, president of Tokyo-based commodities trader Unipac Grain told Dow Jones.
Four medium-sized container ports on Japan’s northeast coast were so severely damaged that they are not expected to resume operations for months or even years. Southern ports such as Tokyo and Yokohama may see more shipments as a result, but are likely to face congestion problems.
Tokyo and all ports south of Japan's capital were said to be operating on Monday after briefly shutting down following Friday's disaster. The rest of the country's ports are being assessed for damage.
Inland transportation of agricultural products is an immediate concern. Transportation in northern Japan is will be severely disrupted for some time, making distribution of supplies difficult.
Editor’s note: Richard Brock, Corn & Soybean Digest's marketing editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.