Rain-damaged European feed wheat may hurt corn sales in Asia

decrease font size  Resize text   increase font size       Printer-friendly version of this article Printer-friendly version of this article

Asian feed grain importers expect an influx of cheap feed wheat from Ukraine and France as heavy rain in Europe damages the quality of crops, leaving them fit for only animal consumption.

South Korea, Thailand and the Philippines are likely to import feed wheat cargoes to replace corn cargoes, pressuring corn prices already hovering near four-year lows on expectations of record production in the United States.

"There is no shortage of feed wheat around and we may see some of that come to Asia as freight rates are reasonably cheap," said Paul Deane, senior agricultural economist at ANZ Bank in Melbourne. "It would be competition for corn."

Excessive rains close to harvest time in France, Ukraine and other parts of Europe have hit the quality of grains.

While quality readings in France are still emerging, reports so far suggest a large portion of the crop will fail to meet the flour-making standards of its main clients, driving exporters towards animal-feed markets.

Feed wheat production in Western Europe and the Black Sea region is likely to climb to 75 million tonnes, around 13 million tonnes more than last year's output, one Melbourne-based analyst estimated.

"The demand side is a bigger bearish element for corn than anything else in light of extra feed wheat available," said the analyst, who declined to be identified as he was not authorized to speak to media.

Feed millers in Europe itself are likely to use an additional 3 million tonnes of wheat in animal rations this year, reducing their dependence on imported corn, traders said.

In its latest forecast, the U.S. Department of Agriculture reduced its estimate for European Union corn imports to 11 million in the year to September, 2015 down from 13 million tonnes predicted in July and 15.5 million tonnes shipped in 2013/14.

Still Too High

South Korea, the world's third-largest corn importer, relies heavily on U.S. corn shipments and is likely to switch some of its demand to Black Sea wheat, traders and analysts said. South Korea buys close to 10 million tonnes of corn a year, or about 8 percent of global trade.

Feed millers in the Philippines and Thailand are looking at pricing feed wheat cargoes from Ukraine, but prices are still more expensive than corn.

Feed wheat from Ukraine is being quoted around $240 a tonne, including cost and freight into Asia, compared with U.S. corn being offered close to $220 a tonne.

"It doesn't work as of now," said one grains trader in Singapore. "But feed wheat suppliers have no choice but to reduce prices to compete with corn."

Analysts expect global milling wheat prices to decline on expectations of higher supplies, which will result in an even bigger drop in feed wheat prices.

Exporters from Ukraine are likely to be more aggressive in cutting prices to compete with corn as farmers in the Black Sea region face financial difficulties.

A bumper harvest of early grains and a lack of funds for further planting and preparing for winter sowing have led farmers to accelerate sales, pushing Ukrainian grain exports to a multi-year high.

Farmers in western Europe are less likely to cut prices, so they could end up with higher closing stocks of lower quality wheat, traders said.

Asian feed makers may also be prepared to pay a premium for feed wheat as it has a higher protein content than corn.

Corn has an around 8 percent protein level, while feed wheat could stand at 11 percent even with rain damage.

And livestock producers prefer rain soaked wheat as it is easier for animals to digest.

Prev 1 2 Next All

Buyers Guide

Doyle Equipment Manufacturing Co.
Doyle Equipment Manufacturing prides themselves as being “The King of the Rotary’s” with their Direct Drive Rotary Blend Systems. With numerous setup possibilities and sizes, ranging from a  more...
A.J. Sackett Sons & Company
Sackett Blend Towers feature the H.I.M, High Intensity Mixer, the next generation of blending and coating technology which supports Precision Fertilizer Blending®. Its unique design allows  more...
R&R Manufacturing Inc.
The R&R Minuteman Blend System is the original proven performer. Fast, precise blending with a compact foot print. Significantly lower horsepower requirement. Low inload height with large  more...
Junge Control Inc.
Junge Control Inc. creates state-of-the-art product blending and measuring solutions that allow you to totally maximize operating efficiency with amazing accuracy and repeatability, superior  more...
Yargus Manufacturing
The flagship blending system for the Layco product line is the fully automated Layco DW System™. The advanced technology of the Layco DW (Declining Weight) system results in a blending  more...
Yargus Manufacturing
The LAYCOTE™ Automated Coating System provides a new level of coating accuracy for a stand-alone coating system or for coating (impregnating) in an automated blending system. The unique  more...
John Deere
The DN345 Drawn Dry Spreader can carry more than 12 tons of fertilizer and 17.5 tons of lime. Designed to operate at field speeds up to 20 MPH with full loads and the G4 spreader uniformly  more...
Force Unlimited
The Pro-Force is a multi-purpose spreader with a wider apron and steeper sides. Our Pro-Force has the most aggressive 30” spinner on the market, and is capable of spreading higher rates of  more...
BBI Spreaders
MagnaSpread 2 & MagnaSpread 3 — With BBI’s patented multi-bin technology, these spreaders operate multiple hoppers guided by independent, variable-rate technology. These models are built on  more...

Comments (0) Leave a comment 

e-Mail (required)


characters left

Declining Weigh Blending System

Ranco Declining Weigh (DW) is the standard in fertilizer blending because of the speed and accuracy of the blending process. ... Read More

View all Products in this segment

View All Buyers Guides

Feedback Form
Feedback Form