Corn replaces feed wheat in Asia
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 email@example.com
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(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