Cattle in feedlot

Cows at a feedlot in Nebraska. More wheat is being fed to livestock as the price of corn increases.

More hard red winter and soft red winter wheat grown in the Midwest will be used for livestock feed as their prices become competitive with corn prices.

The USDA expects U.S. feed wheat consumption to increase to 3.81 million metric tons in the 2019-2020 marketing year, compared to 1.36 million metric tons in the 2018-2019 marketing year.

Wheat becomes an attractive feed ingredient for cattle, hogs and poultry when the cash price gap between wheat and corn shrinks, said Claire Hutchins, a market analyst at U.S. Wheat Associates.

Corn prices were roughly $4.25 to $4.30 per bushel in early July, while wheat was about $4.20 per bushel on the Kansas market.

“It’s positive for farmers who are holding soft red winter, and some who are holding lower-protein hard red winter,” Hutchins told the Capital Press. “It gives them additional marketing opportunities besides domestic mills.”

The move will help reduce supplies, which is potentially bullish for all wheat farmers.

The prices of soft white wheat grown primarily in the Pacific Northwest will likely be maintained. Soft white wheat is primarily used for food unless it is significantly cheaper than corn, Hutchins said.

Corn is a high-energy feed, while wheat is high in protein and amino acids. Hutchins said demand tends to be price-driven. Cattle producers start to consider wheat for feed when it is $1 per bushel higher than corn.

Poultry producers prefer wheat when there’s a 50-cent price spread. Hog farmers prefer wheat because of its high protein and phosphorous content. They will purchase wheat when it’s 5% more expensive than corn.

Wheat was competitive with corn during the 2012-2013 marketing year, when wheat production increased and corn production decreased, and during the 2016-2017 marketing year, when wheat had high yields and low protein.

This year, corn production is expected to drop and wheat production is expected to rise, with higher yields and lower proteins, Hutchins said.

The average price of corn has increased since May with storms and floods shrinking acreage. Wheat prices were increasing on a pace with corn, but the gap between the commodities was closing. The prices of soft red winter and hard red winter dropped in late June and July, Hutchins said.

Most major feedlots are in the Southern Plains and the Midwest.

Industry participants expect the trend to continue for least a few months, Hutchins said. Feedlot managers prefer to keep animal diets steady for months at a time.

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