Elevated feed wheat prices in China cut demand benefiting corn use

In the 2021/22 season, China is anticipated to cut its feed wheat usage in livestock rations as elevated wheat prices persist, Agriculture.com reports.

Traders and analysts estimate that the volume of wheat used in feed production may fall to between 10 and 24 mln t in the current season. More than 40 mln t of wheat was used in feed production in China in 2020/21.

Analysts suggest that the Chinese processors will substitute wheat with other cereals.

"Corn supplies would be sufficient in the new year while wheat prices would remain high, making wheat lose its advantage to substitute corn," said Lv Fengyang, analyst with the agriculture arm of Mysteel, a China-based commodity consultancy.

It is noted that the new government restrictions that ban wheat sold from state stockpiles to be used by feed producers will also slash demand for wheat as a feedstock. Consequently, the demand for corn and soybean meal is expected to rise since the producers will need an alternative source of protein.

China is the key importer of Ukrainian agricultural commodities in 2021. The dollar value of products imported made up USD 4286M.

As of Jan. 26, wheat export from Ukraine totalled 16.7 mln t, corn 14.3 mln t. The volume of supplies is 30% up YoY in both crops.