News last update:6 Aug 2012

Price difference corn and wheat explodes

Corn prices rose last week, capping the biggest weekly gain in three months, due to demand for US grain used in animal feed following the surge in wheat prices and the slump in the dollar.

The price differential between corn and wheat had widened to a record. About 18% of last year's world wheat crop was fed to livestock and poultry.

Corn exporters in the US, the biggest producer of the grain, reported sales of 2.03 million metric tons in the week ended Sept. 13, almost double the previous week and the highest since January 2006.

Corn exports are on the rise and the drop in the dollar will help boost sales.

Wheat price has more than doubled in the past year. Global demand is forecast to exceed output for the seventh time in eight years.

Wheat was valued at 2.3 times higher than corn, up from the 1.1 ratio in February. The record was 2.6 on Sept. 11.

Corn prices jumped this week after China said it will encourage more imports and less production of fuel made from the grain.

China will restrict industrial use of the grain because domestic supplies may fall short of demand for livestock feed, the National Development and Reform Commission said.

China, the world's biggest pork producer and consumer, will spend 1.5 billion yuan ($200 million) in the main hog-producing regions to boost output and ease a national shortage of the meat, the government said .last week.

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