Commodity chats: With Rabobank
Wheat worries: Feed use could squeeze bakers
According to Rabobank data, the demand for wheat used in feed is down 6% on last year – forecast to be 132.5m tons for 2012-13.
However, commodity analyst for the group Erin FitzPatrick said that while the demand is down on last year, it remains high.
“Although not at the same levels as the last marketing year, it is still high in historical terms,” FitzPatrick told BakeryandSnacks.com.
“We can’t afford to have as much wheat going into feed rations as last year simply due to supply globally,” she said.
She compared the forecast demand for wheat in feed to last year’s demand of 140m tons (147m according to USDA) and another previous historical high of 130m tons.
Prompted by competitive prices
Wheat prices are attractive and competitive to feed users, the commodities analyst said, particularly compared to corn – which is currently high and set to soar further.
“The premium we see on wheat over corn has declined in the US. It does now look competitive and is providing an attractive alternative for animal feed use,” she said.
She noted that US wheat is now the cheapest on a global level.
Tight global wheat stocks
FitzPatrick said that wheat stocks will be at a five year low for the 2012-13 period. She noted that Europe in particular is experiencing a tight market.
“There is a risk that wheat stocks to use could fall to record lows this season across Europe. Exports have been extremely high – at unsustainable levels – and production was low,” she said.
“It is possible that Europe may start to import US wheat, although we haven’t seen a strong trend yet. For feed grain however, we have seen very strong imports of corn from the US into Europe,” she said.
The commodities analyst said that the grains market needs a good harvest and good weather in order to replenish stocks and lower prices.
“If this doesn’t happen, it will potentially be another year of high prices,” she concluded.