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Oil prices hit $100 per barrel for first time ever

It has finally happened: During Wednesday trading in New York, crude oil prices exceeded $100 per barrel for the first time ever. A host of factors seem to have combined in order to push prices beyond the century mark: Unrest in Nigeria, increased demand from China, a potential halt in oil exports from Mexico, an expected drop in the US crude oil supply, and fears that the Fed will cut interest rates.

How is this relevant to the Japanese economy? Well, as we know, the current inflation in consumer prices is being driven by high oil and energy-related production costs. Luckily, Japan’s financial markets won’t be open tomorrow, or else there could be some bloodshed. Then again, we have to wonder how much oil prices might “recover” before markets open on Friday.

Expect the Nikkei to follow tomorrow’s Dow and Nasdaq…

Meiji, Morinaga to raise milk prices for first time in 30 years

It’s not often that we get to write something on Japan’s dairy industry, so we’re glad for the chance. First, some context:

Back in November, Meiji, Japan’s largest milk producer, announced that it would cut its profit forecast for this year’s net income by 23 percent. On the same day, Morinaga, Japan’s second largest milk producer, announced an 11 percent decline in profit for the first half of the year. A few days later, Daiwa Institute downgraded its assessment of both firms’ shares to ‘underperform.’ The reason? Higher producer costs were seen as eating into profits. A day after the downgrading, Meiji shares fell by 6.4 percent, and Morinaga’s dropped 7.8 percent.

Today, both firms announced that they would be raising their prices for the first time since 1978. It may seem like a coincidence that both firms made such an announcement on the same day, but it’s not. Milk prices in Japan are set through annual negotiations between dairy firms and about 10 groups that represent milk producers. The agreement announced today will result in about a 3 percent rise in prices for both Meiji and Morinaga, to take effect from April. It was announced that the price hike is necessary due to increased packaging and energy costs. Read more

More on overpriced rice

Last week we wrote about lowered demand and overproduction in this year’s rice crop, which has led to price decreases at wholesale auctions. In an effort to boost prices on behalf of rice farmers, the government was set to purchase 230,000 tons of rice for what I call the nation’s “Strategic Rice Reserves” (the government calls it a “stockpile”, which reminds me of nuclear weapons and sounds a bit negative).

On Sunday, Phillip Brasor had a thought provoking piece on this issue published in the Japan Times. I will quote a bit here, but the whole article needs to be read:

Should Japanese people eat more rice? Again, the voters at home overwhelmingly sided with the farmers: yes, they should. But a number of people in the studio took issue with the question itself.

“Why can’t I eat anything I want?” asked one student, even though he said he ate more rice than the national average. And Honma seemed offended. “That question is pointless,” he said. Whether or not Japanese people “should” eat rice was irrelevant to the debate, since you couldn’t do anything about people’s preferences in a free society.

When free choice and open markets get in the way, it’s time for the PR and marketing people to ramp it up. We’re wondering what sort of campaign the Ministry of Truthiness Agriculture might be whipping up…

Lower Rice Prices for Japan? You Wish.

A few days ago, the Yomiuri told us that Japan’s rice prices are at risk of falling this winter due to oversupply and lack of demand. According to the public utility Kome Kakaku Center (Rice Planning Center), the average price for all brands of rice at the organization’s October 10 auction was 7.9% lower than last year.

If the prospect of paying less for your rice has you worried, there might be no need to fret. According to today’s Nikkei, the Ministry of Agriculture is considering buying about 230,000 tons of rice to add to its Strategic Rice Reserves (I made up that term; the Nikkei uses the decidedly unsexy “rice stockpiles” in its article).

Until now, the government has avoided purposely buying enough rice to cause artificial price changes. That policy just might be changing, however, as the ruling Liberal Democratic Party has some people in the countryside it needs to keep happy. And apparently, some people in the cities it needs to keep paying through the nose.

Pasta looks like it’s going to stay cheap.

Births Up, Suicides Down in 2006: Ministry of Health, Labor and Welfare

The first bit of news should not surprise us so much: The Ministry of Health, Labor and Welfare announced today that Japan’s birth rate had increased from 1.26 in 2006 to 1.32 in 2006. This is the first increase in six years, and the ministry attributes the rise in the country’s birth rate partly to Japan’s economic recovery, which has apparently encouraged more people to get married and have babies.

This is what I’ve been saying all along: No secure future, no kids. Although the ministry declined to say that this is a turnaround in the declining birthrate trend, we have to be on guard for such claims from policymakers who still seem to espouse the attitude that the problem will take care of itself with little or no reform in workplace cultures.

1,092,662 babies were born in Japan in 2006, up 2.8 percent from a year earlier.

And, for the first time in four years, the number of suicides fell below 30,000, at 29,887. The National Police Agency releases more detailed suicide statistics (including the numbers of suspected and suspicious cases), though those won’t be out for a few days or so.

Fiscal 2006 Coporate Goods Price Index

Today the Bank of Japan released its report on Japan’s fiscal 2006 corporate good price index. In terms of domestic corporate goods, if you’re in the business of selling nonferrous metals (+41.6%), scrap & waste (+37.6%) or petroleum & coal products (+10.6%), it must have been a good year.

On the other hand, electrical machinery & equipment dealers (-2.3%), precision instrument sellers (-0.5%), Transportation equipment providers (-0.2%) and agricultural, forestry and fisheries peddlers (-1.2%) are bound to not be so pleased with the results. Those four were the only categories showing a decline in prices for fiscal 2006.

Notable is that in fiscal 2006, wholesale prices climbed 2.8%, showing their sharpest rise in 26 years. At the height of the asset bubble in 1989, wholesale prices posted a 2.7% gain. The BOJ attributes the increase in last year’s prices party to surging prices in nonferrous metals and crude oil.

March 2006 wholesale prices increased 2.0% from the same month a year earlier, increasing for the 37th straight month.

Marxy takes up Clast, takes on the Japanese magazine industry

As reported on the Mutant Frog Travelogue via Jean Snow’s blog, W. David Marx of Neomarxisme fame is now writing as a paid blogger for Clast, which is run by Diamond Agency, who’s site seems to betray a certain newness to the ad agency game (that’s a good thing).

It sounds more complicated than it is; or does it? On his first post, “Japanese Magazines in Freefall,” Marxy takes a look at the Japanese magazine market and the issues it faces. Chief among them are the backdrop that in 2006, “sales were down 4.4% compared to 2005 - the largest single drop since 1999.”

As Marxy puts it:

Conventional wisdom in the Japanese publishing industry blames the rise of the internet. They fear that readers are gradually moving over to the internet to obtain free information instead of relying on magazines.

What does he think of that take on things? You’ll have to read about it on Clast, where the subtitle is, “Breaking down consumer and media insights in Japan.”

Tuna stocks being depleted

Japan is overfishing for tuna, and there may be long-term consequences for the global economy.

At a conference in Kobe, the WWF (formerly the World Wildlife Fund) had this to say:

Atlantic bluefin [tuna], used for high-end sushi and sashimi, is massively overfished and the spawning stock of Southern bluefin in the Indian Ocean is down about 90%.

Japan consumes about a quarter of all word tuna catches, and over half of the Atlantic bluefin. What happens when the sushi runs out?

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