Jul 28, 2014
Home| Tools| Events| Blogs| Discussions Sign UpLogin


Current Marketing Thoughts

RSS By: Kevin Van Trump, AgWeb.com

Kevin Van Trump has over 20 years of experience in the grain and livestock industry.

More Thoughts On Feed Wheat Being Substituted For Corn

Jun 14, 2011

I know many US analyst and traders will be quick to point out that producers here in the US rarely like substituting "feed wheat" for corn.  The problem is feed wheat's widening discount to corn is starting to push up demand for wheat in many Asian countries.  They understand that while corn is a source of starch, wheat does provide them with ample protein in their animal feed.  Right now there are rumors flying everywhere that many animal feed manufacturers have started covering their import requirements for the October-December quarter, and they are seriously considering a much larger switch to less expensive feed wheat varieties.  Currently Australia feed wheat is penciling about $95 cheaper than US corn to the Asia countries.  Some are reporting that further down the line this trend will reverse.  I am not sure when though, as US new crop corn shipments scheduled from October onwards are still running close to $65 per ton more expensive that Australian feed wheat, and about $40 per tone more than Ukraine's feed wheat.  Maybe here in the US, producers aren't making the switch, but with no major corn purchases reported in East Asia for the last two weeks, you have to imagine Asian producers and end users have a different way of thinking.  From what I hear, most insiders are looking for a 5-10% shift in feed millers' usage towards wheat and other ingredients and away from corn this year.  Some traders are thinking this might already be taking place however, because corn has been selling at a premium to wheat in the cash market over in Asia for sometime now. With the US lowering their corn production estimates and being the world's largest exporter, some Asian nations are starting to worry that wheat may soon be their most viable option.  In late April, South Korean buyers purchased 275,000 tons of feed wheat in the span of just two days, mostly from Canada and Europe for shipment in the third quarter. They are now seeking more feed wheat cargoes for September-December shipment. In Japan, similar events are taking place. In Vietnam, the preference is clearly for feed wheat over corn.  The Philippines has covered its feed grain import needs through the next few months with purchases of Australian feed wheat earlier this year.  All I am trying to say is be careful listening to all of those who want to say no one will really make the switch from corn to wheat...some already have and more will follow should corn prices continue to push higher and availability becomes scarce. 
 
 

If you are not getting my free report make sure you get signed up by simply following the link below.  You can also click the button below to follow my Team and I on Twitter and get daily updates on what is happening in the grain and livestock markets.  

 

Send My Free Report

 

       

Follow FarmDirection on Twitter

 

Log In or Sign Up to comment

COMMENTS

No comments have been posted, be the first one to comment.
 
 
 
The Home Page of Agriculture
© 2014 Farm Journal, Inc. All Rights Reserved|Web site design and development by AmericanEagle.com|Site Map|Privacy Policy|Terms & Conditions