What is in this article?:
- Tight corn stocks, not quality concerns, pushing wheat as feed
- Corn supplies tight in China
• Generally, a spike in feed use would indicate quality issues, but other market factors are driving the feed wheat use higher than ever this year.
• Driving feed wheat demand is the very tight supply of corn.
The 2011/12 marketing year will end May 31, a point at which most analysts expect the U.S. Department of Agriculture (USDA) to make only minor changes to its year-end supply and demand estimates.
USDA did make mostly small changes to wheat production, world trade and beginning stocks estimates in its monthly World Agricultural Supply and Demand Estimates (WASDE) report released April 10.
However, USDA sharply increased projections of wheat used for feed. Generally, a spike in feed use would indicate quality issues, but other market factors are driving the feed wheat use higher than ever this year.
Driving feed wheat demand is the very tight supply of corn. Despite five consecutive years of record corn production, projected 2011/12 world ending stocks are 2 percent lower than last year and 7 percent lower than the five-year average. USDA currently projects U.S. ending corn stocks down 29 percent in 2011/12 to 20.3 million metric tons (MMT), 46 percent below the five-year average of 37.8 MMT.
Historically, about 70 percent of total world corn consumption is utilized as feed. However, the increase in total demand for corn, including biofuels, limits the amount available this year for feed. The lower supply of corn for feed and relatively high corn prices has driven livestock owners to look to alternative feed grains.
The April WASDE indicated that USDA expects wheat will meet a large portion of the unmet feed demand. USDA increased projected world feed wheat use by 7.0 MMT in April to a record 138 MMT, 5 percent greater than the previous record set in 1990/91 and 22 percent greater than the five-year average.