SINGAPORE — Asian feed manufacturers are turning to wheat in animal rations due to multi-year high corn prices, Reuters reported.
China, South Korea and Vietnam are buying more wheat from Australia and the Black Sea region, according to two Singapore-based grain traders.
Together, those three countries are expected to buy 26.4% of global corn this year, according to the US Department of Agriculture (USDA).
Chicago corn futures climbed to their highest since June 2013 this week and have gained 37% in 2021, while wheat has jumped 16% since the beginning of the year to its highest since February 2013.
Strong global demand, adverse weather in the United States and expected lower output in Brazil has created concern about global corn supplies, Reuters said. Wheat has followed corn higher even though there are no supply issues right now.
“We expect volatility in grain trade flows to continue for the rest of the year,” said one of the Singapore-based traders, who works at an international trading company that sells grains to Asian and Middle Eastern buyers. “With such gains in corn prices, there will be destruction in Asian corn demand and result in lower corn imports by some countries.”
Traders expect purchases to increase from Indonesia, the Philippines and Thailand, which use feed wheat on a regular basis.
The rally in grain prices was triggered by China and other importers late last year stockpiling food, Reuters said. China already has moved to wheat in key hog producing areas.
Global corn inventories have declined over the past four years. World corn reserves are forecast to shrink to 283.85 million tonnes in 2020-21 from an all-time high stockpile of 351.81 million tonnes in 2016-17, Reuters said.