Chinese trading houses bought 350,000 metric tons of feed wheat from Australia, a financial news arm of the state-controlled Xinhua news agency reported Thursday.

The imports were booked "in recent days," Xinhua said, without elaborating.

Analysts said the estimated price of $280/ton was well below domestic prices, which likely spurred the imports that are slated for delivery around mid-year.

China's domestic feed wheat prices are around CNY2,000/ton, while the Australian imports translate to around CNY1,760/ton, cost and freight, a wheat analyst with Zhengzhou Esunny Information & Technology Co. said.

Global wheat prices are now roughly on par with corn, making them more attractive.

The Chicago Board of Trade's May corn contract traded at $6.42 a bushel Wednesday compared with $6.75/ton for wheat. Six months ago, wheat traded at a premium of about $3 to corn.

Feed wheat trades at a further discount to food wheat, depending on the grade.

"Wheat prices are now more competitive than corn going into our compound feed," a senior Beijing-based executive of a major U.S. meat processing company said. "Wheat is a substitute for corn at current prices."

Market participants said it's no longer unusual for corn to trade at a premium to wheat.

"It's been trending that way in the last few months and it's been a long-term trend," he said.

Late last year, traders projected that buyers were likely to turn to feed wheat amid cheaper availability as a substitute to corn, with many U.S. corn buyers already making the shift toward cheaper Australian and Black Sea wheat.

Corn prices have fallen about 20% from a record set last June.

An official at the state-owned China National Grain and Oils Information Center declined to comment.

Customs data released Wednesday showed China imported 584,853 tons of wheat in the first two months this year compared with 175,178 tons in the same period last year.

Chinese stockpilers have also been sucking in corn, chalking up 1.3 million tons of mostly U.S. imports in the first two months this year.

Still, China is expected to only be a dip buyer as a sizable wheat harvest looks likely.

State Grain Administration director Nie Zhenbang told reporters in March that there is a surplus of domestic wheat and China's output this year is unlikely to fall as the weather has been favorable.

-By Chuin-Wei Yap, Dow Jones Newswires; 8610 8400 7704; chuin-wei.yap@dowjones.com.

(END) Dow Jones Newswires

March 22, 2012 05:08 ET (09:08 GMT)