In parts of northern Europe the price of animal feed wheat has risen higher than the price of bread-quality wheat, traders reported recently.
The reason given for the short supply of feed wheat is the exceptionally cold winter, which reduced feed grain exports from the Black Sea, coupled with the fact that European meat sales have been positive and soyabeans are expensive.
"Suddenly some feed makers in Germany, the Netherlands, Denmark and Poland find they have strong feed demand and low supplies, one German trader said"
In Germany, feed wheat for nearby delivery in the South Oldenburg animal feed grains market near the Netherlands was offered for sale at €239 a tonne last week, way above milling wheat for May delivery in Hamburg at €232 a tonne.
"A lot of bread wheat is being sold for feed, especially in Germany," another trader said.
"Wheat is a commodity and it will simply be sold to the highest bidder, on the bottom line farmers do not care what it is used for. I think many feed manufacturers had been expecting weak grain prices in early 2012 and were caught out as prices rose."
EU benchmark milling wheat prices in Paris rose from around €180 ($240) a tonne in late December 2011 to around €215 last week. An early season surge in Russian and Ukrainian grain exports following larger harvests had weakened prices, but Black Sea exports lost momentum in early 2012 as supplies sold out and an exceptionally cold weather disrupted shipping.