Asian feed millers switch to cheaper corn

01-10-2007 | |

Feed mills in Asia are increasingly switching to other grains such as corn as wheat becomes prohibitively expensive, industry participants said.

Wheat prices continued to rise in Asian trading Last week wheat reached an
all-time high at the Chicago Board of Trade as a result of reports of further
damage to the Australian crop amid ongoing dry weather conditions there.
Russia’s decision to impose a 10% tax on wheat exports, starting November, also
boosted prices.

Wheat prices further came in upward movement after talk
of thinning supply from other sources such as Ukraine and a series of buy
tenders from key consumers such as Algeria, Morocco, Jordan, Pakistan and Iraq
have.

In South Korea, feed wheat usage may drop to 500,000 tonnes this
year, compared with 700,000 tonnes last year, as many mills can’t afford the
current high prices of around $430-$450/tonne for feed wheat, industry analysts
said.

Gold Coin Mills, one of Malaysia’s largest feed milling companies,
has stopped using feed wheat completely while other Malaysian companies are
cutting back on the use of wheat in feed.

Strong demand for
flour
There is also a strong demand for wheat from the food sector. For
example, Indonesian flour demand has been steadily rising as wheat-based meals
are still cheaper than rice-based meals.

Similarly, South Korean flour
millers have no choice but buy at current prices.

In Thailand, wheat
imports are expected to rise in the 2007-08 (September-August) marketing year,
as demand for western-style diet will continue the upward trend as bakery and
instant noodle products grow increasingly popular with Thai
consumers.

New flour mills are coming up while existing mills are adding
capacity or operating at full capacity after utilizing only 70%-80% of the
capacity last year.

Correspondents



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