By MATTHEW WEAVER
Overseas customers are buying soft white wheat for feed and that will continue, U.S. Wheat representatives say.
More than 90 percent of the soft white wheat export sales for feed use sold in the last three months, according to U.S. Wheat Associates. Feed use accounts for 16.6 percent of all soft white exports since June 1, 2011. Roughly 25 million bushels of soft white wheat shipped to the pork and poultry feed markets of Korea and Mexico, among others.
U.S. Wheat Associates says soft white wheat is currently the lowest priced wheat in the world. Steve Mercer, U.S. Wheat director of communications, said the price for soft white wheat was about $7.51 per bushel as of March 15, or $276 per metric ton. Importers pay freight costs in addition to that price.
The low prices and large supplies are attracting feed manufacturers.
The feed wheat is the same quality as milling wheat, said Shawn Campbell, assistant director for the U.S. Wheat office in Portland.
Mercer said it's not a negative to see quality milling wheat going through feed channels, noting feed customers are paying the same prices as milling customers.
"This is a rare situation and U.S. Wheat Associates always promotes soft white wheat for its milling qualities," he said. "We are doing very well in feed markets because every other option for feed grain buyers is not very viable right now."
Soft white wheat makes up 96 percent of the white wheat exported from the United States.
According to U.S. Wheat, more white wheat has been produced than used for the past four years, with 2010-11 ending stocks at 2.3 million metric tons, or 85 million bushels. USDA projects white wheat ending stocks will be 2.37 million metric tons, or 87 million bushels, by the end of 2011-12.
Soft white wheat is likely to remain competitive, Campbell said, with USDA estimating world white feed wheat use will be 16 percent more in 2011-12 than the previous year.
Other factors Campbell cites include:
-- Wheat from Black Sea regional supplies is more expensive than U.S. soft white because most wheat produced and stored relatively close to local ports has already been exported.
-- Australian feed wheat stocks are at a record 8 million metric tons, 30 percent of all the country's wheat stocks, but feed manufacturers in Asia cannot get the wheat quickly due to a bottleneck at Australian ports, which Campbell expects to continue.
-- Ukraine, typically the world's largest feed wheat exporter, and parts of Russia have seen winterkill likely to hurt new crop production
-- Mexico, Brazil and Argeninta all had relatively poor corn crops, supporting world corn prices.
Mercer said the next potential factor to watch is the USDA Planting Intentions report on March 30. If planting for corn is up and the weather appears favorable, it could lower corn prices for a while, but he said corn prices are likely to remain high until the market receives clearer information.