Japan has a well-developed food retail market that demands high-quality, high-value agricultural and food products, said the USDA’s Foreign Agricultural Service, in a trade report, and its reopening after COVID shutdowns signals US export opportunities.
Despite reduced economic activity during the COVID-19 pandemic, trade data show agricultural imports have remained resilient, the FAS said. As Japan’s top supplier of agricultural products, the US is a stable and reliable partner with a long-standing relationship.
Although competition in Japan has intensified in recent years, US suppliers can find many opportunities to market consumer-oriented products that follow Japanese retail trends, the FAS said.
MACROECONOMIC PERSPECTIVE
Japan is a high-income country with a population of 125.7 million people, the FAS said. It is one of the most highly urbanized countries in the world with more than 90% of the population living in urban areas.
With the third-largest economy in the world, Japan has a highly diversified manufacturing and service economy, the FAS said. According to household data from IHS Markit, 95% of Japanese households, about 51.6 million households, have incomes higher than $20,000 at purchasing power parity.
In 2021, Japan had a Gross Domestic Product per capita at purchasing power parity of $42,940, the FAS said. According to the latest International Monetary Fund forecast, real GDP growth was projected at 1.6% in 2023 and 1.3% in 2024.
AGRICULTURAL TRADE
Despite various challenges and an uncertain global economic environment, Japan’s agricultural trade, particularly agricultural imports, has been resilient because these imports play a crucial role in Japan’s domestic food supply, the FAS said. According to Japan’s Ministry of Agriculture, Forestry and Fisheries annual report, Japan’s food self-sufficiency ratio on a caloric basis was 37% in 2020, suggesting many food items depend on imports for availability, particularly livestock products and animal feed.
In 2022, Japan imported $70.2 billion of agricultural products, a 16.4% increase from pre-COVID 2019, surpassing record-level imports of 2011 and 2012, the FAS said. Although rising food prices contribute to higher unit prices, putting pressure on real income and purchasing power, Japan is an advanced economy where demand for high-quality food is relatively stable compared to emerging economies.
Despite higher retail beef prices, beef shipments to Japan in value and shipment volumes remained steady, the FAS said. Higher prices may shift consumer preferences from fresh or chilled beef to frozen product, or from beef to pork and poultry products, but beef consumption was expected to increase in 2023 as Japan’s reopening to foreign visitors further supports the hotel, restaurant and institutional sector’s recovery.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $160.13 to $161.05 per cwt, compared with last week’s range of $156.00 to $159.91. FOB dressed steers, and heifers went for $249.44 to $253.34 per cwt, versus $244.52 to $252.19.
The USDA choice cutout Tuesday was up $2.11 per cwt at $272.06 while select was up $2.57 at $258.78. The choice/select spread narrowed to $13.28 from $13.74 with 88 loads of fabricated product and 25 loads of trimmings and grinds sold into the spot market.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.50 to $1.70 a bushel over the Mar corn contract. Bids in Kansas were steady at $0.75 over Mar, which settled at $6.82 1/4 a bushel, down $0.02 3/4.
No live cattle contracts were tendered for delivery on Tuesday.
The CME Feeder Cattle Index for the seven days ended Monday was $183.06 per cwt, down $0.27. This compares with Tuesday’s Mar contract settlement of $186.65 per cwt, down $0.55.