Home / Markets / Markets Analysis / Corn market / Corn replaces feed wheat in Asia

Corn replaces feed wheat in Asia

06/18/2013 @ 7:47am

Black Sea origin corn is selling at a discount of $23 a metric ton to feed wheat in East Asia, prompting buyers to substitute wheat with corn, trading executives and feedmillers said Tuesday.

The upcoming corn harvest in Brazil, the recently completed corn plantings in the U.S. and rising corn production in Ukraine are all expected to push up global corn production to a record high and drag down prices, they said.

South Korea's largest animal feed miller, Nonghyup Feed Inc., or Nofi, Tuesday got the lowest offer in a tender to import 55,000 metric tons of optional origin feed wheat at around $282/ton, basis cost and freight but cancelled the tender citing cheaper availability of corn.

The lowest offer for feed wheat was made by Noble Resources at around $282/ton, basis cost and freight but Nofi rejected the offer.

Nofi instead bought two cargoes totaling 127,000 tons of optional origin corn. It bought a 69,000-ton cargo of South American or U.S. corn for arrival by Oct. 30 at a premium basis over the December futures contract on the Chicago Board of Trade, which at current price levels works out to be around $274.50/ton, C&F.

For arrival by Nov. 15, Nofi bought an even cheaper cargo at $259.23/ton, C&F, likely to be supplied from the Black Sea region by Swiss commodities trading company, Agrifert SA. It is the cheapest corn purchase price for any South Korean company in more than a year. Nofi is buying Black Sea origin corn for the first time.

"By November Ukraine's next Black Sea region harvest will be ready for delivery and many millers are planning to reduce feed wheat use by replacing with corn," said an animal feedmiller in Seoul.

Corn output is expected to rebound by 10% to 963 million tons in 2013-14, G-20's Agricultural Market Information System said in its first demand-supply forecast for next year, earlier this month.


Write to Sameer C. Mohindru at sameer.mohindru@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
June 18, 2013 08:41 ET (12:41 GMT)
DJ Feed Millers to Substitute Wheat with Corn on Large Black Sea Discount->copyright

CancelPost Comment
MORE FROM DOW JONES NEWSWIRES more +

More Pig Losses Seen, Smithfield Says By: 05/14/2014 @ 7:55am The swine industry is struggling to contain a deadly virus that's sweeping U.S. hog farms…

Senators Turn Up Heat on Railroad Companies By: 05/13/2014 @ 11:39am Four Midwestern U.S. senators add their voices to a growing chorus of farmers, ethanol producers…

Summary of Friday's WASDE Report By: 05/09/2014 @ 2:53pm The following table is provided as a service to Wall Street Journal subscribers in conjunction…

MEDIA CENTERmore +
This container should display a .swf file. If not, you may need to upgrade your Flash player.
The Future of Livestock Production
Agriculture.com

FREE MEMBERSHIP!

CLOSE [X]