Corn, Fuel, Foreign Exchange and Freight Price Volatility and Procurement Risks

「Although Chicago corn futures declined year on year, import prices for raw corn rose and raw material procurement costs increased because of the yen’s depreciation and higher ocean freight rates.」

「The market rose against the backdrop of surging crude oil and fertilizer prices following attacks on Iran by the United States and Israel at the end of February. At the end of the period, it was in the 457-cents-per-bushel range, and the full-year average was in the 431-cents-per-bushel range.」

「The Chicago corn market, the price of the Company’s raw-material corn, started the period in the 461-cents-per-bushel range, but fell to the 383-cents-per-bushel range in August following expectations of bumper crops in Brazil and Argentina and substantial upward revisions to yield and production estimates in the U.S. Department of Agriculture’s August report. It subsequently recovered on rising prices for other grains and firm export demand for U.S. corn, reaching the 415-cents-per-bushel range at the end of the interim period.」

「If increases in the prices of raw materials, secondary materials, supplies and fuel, as well as foreign exchange-related fluctuations, cannot be passed on to product selling prices, the Group’s operating performance, financial position and cash flows may be affected.」

「The Chicago corn market, the price of the Company’s raw-material corn, started the period in the 435-cents-per-bushel range and rose to the 472-cents-per-bushel range in mid-May on forecasts of high temperatures and dry conditions in South America. It then fell to the 362-cents-per-bushel range in late August as the U.S. new-crop corn grew steadily, the U.S. quarterly inventory report and new-crop acreage report were revised upward, and expectations of a bumper crop strengthened.」

「As economic activity normalizes, global grain supply and demand is recovering, but concerns about rising grain prices have not abated due to increasing geopolitical risks, including adverse weather conditions and the situations in Ukraine and the Middle East. The disruption of logistics caused by falling water levels in the Panama Canal is also a concern as a risk to raw-material procurement.」

「The Chicago corn market, the price of the Company’s raw-material corn, started the period in the 657-cents-per-bushel range and fell to the 476-cents-per-bushel range in July due to rainfall in major producing regions and upward revisions by the U.S. Department of Agriculture to its estimate of new-crop acreage. In mid-month, however, Russia announced that it would withdraw without agreeing to extend the Black Sea grain corridor, and the market rose temporarily to the 560-cents-per-bushel range amid heightened tensions over Ukraine. It subsequently fell to the 460-cents-per-bushel range as expectations of a bumper U.S. crop strengthened and Brazilian grain exports remained firm. In October, it rose to the 505-cents-per-bushel range on increased U.S. exports and other factors, but fell to the 449-cents-per-bushel range in late November as the U.S. harvest progressed smoothly and weather conditions in Brazil improved. At the end of the third quarter, it stood in the 471-cents-per-bushel range.」

「The Chicago corn market, the price of the Company’s raw-material corn, started the period in the 657-cents-per-bushel range and fell to the 476-cents-per-bushel range in July due to rainfall in major producing regions and upward revisions by the U.S. Department of Agriculture to its estimate of new-crop acreage. In mid-month, however, Russia announced that it would withdraw without agreeing to extend the Black Sea grain corridor, and the market rose temporarily to the 560-cents-per-bushel range amid heightened tensions over Ukraine.」

「The Chicago corn market, the price of the Company’s raw-material corn, started the period in the 657-cents-per-bushel range, but fell temporarily to the 554-cents-per-bushel range in mid-May following cancellations of corn contracts for delivery to China and the extension of the safe grain corridor for Ukrainian grain.」

「If increases in the prices of raw materials, secondary materials, supplies and fuel, as well as foreign exchange-related fluctuations, cannot be passed on to product selling prices, the Company’s operating performance, financial position and cash flows may be affected. To address these market risks in grain and foreign exchange, the Company does not engage in speculative transactions under its Market Risk Management Regulations and is reducing the impact of fluctuations through various hedging measures.」

「The Chicago price of raw corn started the period in the 735 cents-per-bushel range and temporarily rose to the 818 cents-per-bushel range due to the prolonged situation in Ukraine and planting delays caused by adverse weather in the United States in early spring. It subsequently fell to the 602 cents-per-bushel range as weather conditions improved and a bumper crop of Brazilian corn was forecast. Prices then rose due to a larger-than-expected decline in U.S. ending inventories, concerns about closure of the grain corridor following Russian attacks on Ukraine and concerns about dry conditions in South America, averaging in the 670 cents-per-bushel range in the third quarter.」

「Meanwhile, the outlook became extremely uncertain due to surging crude oil and raw material prices resulting from the prolonged Russian invasion of Ukraine and rapid yen depreciation against a backdrop of divergent monetary policies in Japan and the United States.」

「The business environment became extremely uncertain due to surging crude oil and raw material prices resulting from the prolonged Russian invasion of Ukraine and rapid yen depreciation against a backdrop of divergent monetary policies in Japan and the United States.」

「Global conditions have become unstable amid heightened international tensions resulting from Russia's invasion of Ukraine, raising concerns about a substantial increase in manufacturing and logistics costs due to surging raw material and fuel prices and a trend toward yen depreciation.」

「The Chicago price of raw corn started the period in the 559 cents-per-bushel range and rose to 740 cents per bushel as U.S. ending inventories were expected to decline due to increased exports to China and adverse weather in Brazil. It subsequently fell to 523 cents per bushel as U.S. harvested area and yields exceeded market expectations and China's corn production was forecast to reach a record high. Prices then rose on firm ethanol demand and concerns about drought in South America, averaging 566 cents per bushel in the third quarter. Crude oil prices started the period in the $61.5-per-barrel range and rose to the $81-per-barrel range amid a phased OPEC+ production-cut agreement, a recovery in oil demand as economic activity normalized worldwide with the spread of COVID-19 vaccines and energy shortages in China, Europe and elsewhere. Prices subsequently turned lower amid concerns about weaker oil demand due to the spread of the Omicron variant, averaging in the $77-per-barrel range in the third quarter.」

「Crude oil prices started the period in the $61.5-per-barrel range and continued rising, reaching the $71-per-barrel range on average in the second quarter, amid a phased OPEC+ production-cut agreement, a recovery in oil demand as economic activity normalized worldwide with the spread of COVID-19 vaccines, and energy shortages in China, Europe and elsewhere. Grain ocean freight rates from the United States to Japan started the period in the $57-per-ton range and rose to the $76-per-ton range in the second quarter as resource demand increased, particularly in China and North America, where economic recovery from the COVID-19 pandemic was progressing, and vessel supply and demand tightened due in part to increased vessel delays caused by crew COVID-19 testing.」

「The Chicago price of raw corn started the period in the 559 cents-per-bushel range and rose to 740 cents per bushel in late April as U.S. ending inventories were expected to decline due to increased exports to China and adverse weather in Brazil. It subsequently declined due to an outflow of speculative funds following improved weather in the U.S. Midwest and a review of U.S. monetary policy, averaging in the 654 cents-per-bushel range in the first quarter.」

「The Chicago price of raw corn started the period in the 334 cents-per-bushel range, … reached the 560 cents-per-bushel range at the end of the period and averaged in the 403 cents-per-bushel range for the full year.」

「The Chicago price of raw corn started the period in the 334 cents-per-bushel range and declined to the 319 cents-per-bushel range due to increased ending inventories resulting from weaker demand amid the spread of the novel coronavirus and expectations of higher new-crop production. It subsequently rose due to planted area falling significantly short of market expectations and concerns about deteriorating crop conditions caused by adverse weather, and then continued rising due to increased Chinese purchases of U.S. corn and adverse weather in the United States and South America, averaging in the 417 cents-per-bushel range in the third quarter.」

「The Chicago price of raw corn started the period in the 334 cents-per-bushel range and declined to the 319 cents-per-bushel range due to increased ending inventories resulting from weaker demand amid the spread of the novel coronavirus and expectations of higher new-crop production. It subsequently rose due to planted area falling significantly short of market expectations and concerns about deteriorating crop conditions caused by adverse weather, averaging in the 340 cents-per-bushel range in the second quarter. Crude oil prices started the period in the $20-per-barrel range and declined to the $17-per-barrel range due to weaker demand following lockdowns in the EU and United States. They subsequently rose as demand gradually recovered following the resumption of economic activity worldwide and OPEC+ continued coordinated production cuts through the end of the year, averaging in the $40-per-barrel range in the second quarter.」

「The Chicago price of raw corn started the period in the 334 cents-per-bushel range and declined to the 319 cents-per-bushel range due to increased ending inventories resulting from weaker demand amid the spread of the novel coronavirus and expectations of higher new-crop production. It subsequently rose as planted area fell significantly short of market expectations, averaging in the 322 cents-per-bushel range in the first quarter. Crude oil prices started the period in the $20-per-barrel range and declined to the $17-per-barrel range due to weaker demand following lockdowns in the EU and United States. They subsequently rose as demand gradually recovered following the resumption of economic activity worldwide, averaging in the $28-per-barrel range in the first quarter. Grain ocean freight rates from the United States to Japan started the period at around $44 per ton and rose to $47 per ton in the first quarter as lockdowns were lifted worldwide and cargo movements increased. The exchange rate started the period in the ¥107-per-dollar range, but the yen weakened slightly as countries worldwide began moving toward reopening their economies, averaging in the ¥108-per-dollar range in the first quarter.」

「The Chicago price of raw corn started the period in the 361 cents-per-bushel range and reached the 435 cents-per-bushel range due to planting delays caused by prolonged rain in the United States. … It declined to the 340 cents-per-bushel range at the end of the period due to the deterioration of the global economy caused by the spread of the novel coronavirus, averaging in the 384 cents-per-bushel range for the full year.」

「The Chicago price of raw corn started the period in the 361 cents-per-bushel range and reached the 435 cents-per-bushel range due to planting delays caused by prolonged rain in the United States. It subsequently declined to the 367 cents-per-bushel range on expectations of favorable weather for crop growth, but rose to the 382 cents-per-bushel range on expectations of increased U.S. grain exports following the Phase One trade agreement between the United States and China, averaging in that range in the third quarter. Crude oil prices started the period in the $61-per-barrel range and rose to the $63-per-barrel range as U.S. sanctions against Iran heightened geopolitical risks in the Middle East. Although prices temporarily surged following attacks on oil facilities in Saudi Arabia, they declined to the $54-per-barrel range amid concerns about weaker global oil demand and a recovery in production, then averaged in the $56-per-barrel range in the third quarter. Grain ocean freight rates from the United States to Japan started the period at around $51 per ton and rose to the $58-per-ton range in the third quarter due to increased South American grain shipments and the expected tightening of IMO (International Maritime Organization) SOx regulations from January 2020. The exchange rate started the period in the ¥112-per-dollar range, but the yen appreciated to the ¥107-per-dollar range amid concerns about escalating U.S.-China trade friction, large-scale protests in Hong Kong and worsening geopolitical risks in the Middle East following attacks on tankers in the Strait of Hormuz. It subsequently weakened to the ¥109-per-dollar range in the third quarter after the United States cut its policy rate for a second time in September, the Phase One U.S.-China trade agreement was reached and the Conservative Party won a landslide victory in the U.K. general election, dispelling uncertainty over the United Kingdom's withdrawal from the EU.」

「The Chicago price of raw corn started the period in the 361 cents-per-bushel range and reached the 435 cents-per-bushel range due to planting delays caused by rainfall in the United States. It subsequently declined as weather became favorable for crop growth, averaging in the 390 cents-per-bushel range in the second quarter. Crude oil prices started the period in the $61-per-barrel range and rose to the $63-per-barrel range as U.S. sanctions against Iran heightened geopolitical risks in the Middle East. However, despite a temporary sharp rise following attacks on oil facilities in Saudi Arabia, prices declined amid concerns about weaker global oil demand and a recovery in production, averaging in the $56-per-barrel range in the second quarter.」

「The Chicago price of raw corn started the period in the 361 cents-per-bushel range and reached the 435 cents-per-bushel range due to planting delays caused by rainfall in the United States. It subsequently declined after the planted area announced at the end of June exceeded market expectations, averaging in the 392 cents-per-bushel range in the first quarter. Crude oil prices started the period in the $61-per-barrel range and rose to the $63-per-barrel range as U.S. sanctions against Iran heightened geopolitical risks in the Middle East. They subsequently declined amid concerns about weaker global oil demand, averaging in the $59-per-barrel range in the first quarter.」

「Factors with a material impact on our business performance include Chicago corn prices, crude oil prices and foreign exchange rates, and market conditions for all three pressured earnings during the fiscal year. Looking ahead, we expect market conditions for all three to continue moving in a direction that will pressure earnings.」

「Crude oil prices started the period in the $63-per-barrel range and rose to the $75-per-barrel range amid heightened geopolitical risks in the Middle East, OPEC's decision to maintain its production quota, concerns about lower crude oil production resulting from U.S. sanctions banning Iranian crude imports and expectations of economic growth in North America following the USMCA agreement. Prices subsequently declined to the $45-per-barrel range by the end of the third quarter as production increased in the United States and Saudi Arabia and supply was expected to increase after the United States announced that it would allow 8 countries, including Japan, to continue importing Iranian crude for 180 days despite its sanctions banning Iranian crude imports.」

「The Chicago price of raw corn started the period in the 387 cents-per-bushel range and rose to the 408 cents-per-bushel range due to concerns about poor crop conditions caused by delayed planting in the United States and insufficient rainfall in Brazil. It subsequently declined as planting in the United States was completed at a normal pace, weather became favorable for crop growth and a record harvest was forecast, reaching the 356 cents-per-bushel range at the end of the second quarter. Crude oil prices started the period in the $63-per-barrel range and rose due to heightened geopolitical risks in the Middle East, OPEC's decision to maintain its production quota and concerns about lower crude oil production resulting from U.S. sanctions banning Iranian crude imports, reaching the $73-per-barrel range at the end of the second quarter. Earnings remained under pressure from factors including lower selling prices due to intensifying competition and higher crude oil prices.」

「The Chicago price of raw corn started the period in the 387 cents-per-bushel range and rose to the 408 cents-per-bushel range due to concerns about poor crop conditions caused by delayed planting in the United States and insufficient rainfall in Brazil. It subsequently declined as planting in the United States was completed at a normal pace and weather became favorable for crop growth, reaching the 350 cents-per-bushel range at the end of the first quarter. Crude oil prices started the period in the $63-per-barrel range and rose to the $74-per-barrel range as concerns about tighter supply and demand remained unresolved amid heightened geopolitical risks in the Middle East and OPEC's decision to maintain its production quota, as well as concerns about lower Iranian crude oil production after the U.S. president urged countries worldwide to stop importing Iranian crude. Earnings remained under pressure from factors including lower selling prices due to intensifying competition and higher crude oil prices.」

「Factors with a material impact on our business performance include Chicago corn prices, crude oil prices and foreign exchange rates, and market conditions for all three pressured earnings during the fiscal year. Looking ahead, we expect market conditions for all three to continue moving in a direction that will pressure earnings.」

「The Chicago price of raw corn started the period in the 360 cents-per-bushel range and rose to the 400 cents-per-bushel range in July as adverse weather in the northern Corn Belt after new-crop planting heightened concerns about dry conditions. It subsequently declined to the 350 cents-per-bushel range as weather became favorable for crop growth and a record harvest was forecast. Crude oil prices started the period in the $50-per-barrel range and rose to the $53-per-barrel range on expectations that OPEC would extend its coordinated production cuts. They subsequently declined to the $42-per-barrel range due to perceptions of oversupply resulting from increased crude oil production in the United States and Libya and slow progress on the cuts. Prices then rose as geopolitical risks increased in the Middle East and OPEC decided in November to extend its production cuts for 9 months, reaching the $60-per-barrel range at the end of the third quarter.」

「The Chicago price of raw corn started the period in the 360 cents-per-bushel range and rose to the 400 cents-per-bushel range as adverse weather in the northern Corn Belt after new-crop planting in the United States heightened concerns about dry conditions. It subsequently declined as weather became favorable for crop growth and the production outlook exceeded market expectations, reaching the 340 cents-per-bushel range at the end of the second quarter.」

「The Chicago price of raw corn started the period in the 360 cents-per-bushel range and rose to the 380 cents-per-bushel range due to adverse weather in the northern Corn Belt after new-crop planting in the United States. It subsequently declined as weather became favorable for crop growth and Brazil's corn production outlook remained strong, reaching the 370 cents-per-bushel range at the end of the first quarter. Crude oil prices started the period in the $50-per-barrel range and rose to the $53-per-barrel range on expectations that OPEC would extend its coordinated production cuts. They subsequently declined due to perceptions of slow progress on the cuts and oversupply resulting from increased U.S. crude oil production, reaching the $46-per-barrel range at the end of the first quarter.」

「The Chicago price of raw corn started the period in the 350 cents-per-bushel range and rose to the 430 cents-per-bushel range in June due to concerns about hot, dry conditions after new-crop planting in the United States and reduced production caused by adverse weather in South America. It subsequently declined as weather conditions in the United States became favorable for crop growth and a record harvest was forecast, reaching the 350 cents-per-bushel range at the end of the third quarter.」

「The Chicago price of raw corn started the period in the 350 cents-per-bushel range and rose to the 430 cents-per-bushel range in June due to concerns about hot, dry conditions after new-crop planting in the United States and reduced production caused by adverse weather in South America. It subsequently declined as weather conditions in the United States became favorable for crop growth and a record harvest was forecast, reaching the 330 cents-per-bushel range at the end of the second quarter.」

「We import most of our corn raw material from the United States, and its price fluctuates in response to prices in the Chicago grain market. It may also fluctuate due to the foreign exchange market and other procurement costs, including ocean freight. In addition, we use heavy oil and LNG, whose price is closely linked to crude oil prices, as fuel for factory boilers, and a surge in crude oil prices increases production costs.」