Japan's domestic wheat production has decreased, while import demand has increased.

As the largest wheat importer in Asia, Japan's wheat imports are likely to increase this fiscal year because of a decline in domestic production due to rainy weather and a steady increase in demand.

ShiraraShiokawa, an official with Japan's Ministry of Agriculture, said the government is currently considering increasing the planned amount of wheat imports in 2009 from April to March 2009 to 4.91 million tons, as rainfall may reduce wheat production in Hokkaido.

The increase in Japanese wheat imports may help CBOT soft red winter wheat market prices continue to rise. In march, the Japanese government raised its wheat import plan for the current fiscal year by 1%, the highest level in three years, as the government predicted that domestic wheat demand would rise and production would remain stable.

The Ministry of Agriculture cut the price of imported wheat sold to flour processors by 14.8% in April, the first reduction since 2006. As a result, sales of Japanese wheat products began to increase in May.

'We may cut wheat prices again in October this year, 'Mr. Shiokawa said. The Ministry of Agriculture controls the import of wheat and the sale of domestic wheat, evaluating the price sold to flour processors twice a year.

The scale of additional wheat imports will depend on the domestic wheat harvest, Shiokawa said.

Japan relies on imports for about 90% of its wheat demand.

In March, Japan's Ministry of Agriculture expected domestic wheat production to be 830000 tons, the same as the previous year. Last year, Hokkaido wheat output was 545100 tons, accounting for 65% of the country's total wheat output.

Affected by El Ni ñ o, the weather is cold and rainy this summer, which has affected Japanese agricultural production. Japan's rice production is likely to fall by 6.9% this year, the lowest level in six years, due to a decline in per unit yield.

In the 12 months to June 30, 2008, Japanese rice consumption increased by 2 per cent to 8.55 million tons.