Earthquake in Japan Concerns Agricultural Sector

Japan was rocked last week by a massive 9.0 earthquake. The quake, which caused tsunamis with waves up to 33 ft. high, pummeled the northeastern portion of the main Japanese island of Honshu.  In addition to the staggering human cost of the earthquake, the recent disaster has worried American agricultural investors and exporters.

Japan is currently a major importer of American agricultural goods. Japan is the number two market for American wheat and a major market for corn and soybeans. The massive quake will most likely slow Japan’s economy, currently the third largest in the world, and will most likely lower Japanese demand for agricultural commodities.

Commodity prices dropped in the U.S. following news of the disaster. Corn prices plunged on Tuesday, and some brokers believe prices could fall as low as $5.75 a bushel. The damage to Japanese infrastructure and increasing radioactive pollution caused by damaged nuclear facilities led many investors dump stocks and commodities. In addition, while the damage done to Japanese shipping and ports has not been fully assessed, it will almost certainly hurt agricultural imports.

The long-term impact of the earthquake is harder to assess. Initial assessments of Japanese agricultural production facilities indicate damage from both the earthquake and the fallout from Japan’s nuclear reactor, damage which could lower Japanese agricultural production and, in the long-term, encourage further importation of American goods.

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Written by: Justin Ellison / Farm Plus Staff Writer