US corn woes could send HRW into feed, cut exports

Lower US corn output may see more feed wheat switch into the domestic feed mix and potentially drag HRW – a wheat normally used in flour production – into the animal feed pool, market sources told Agricensus Thursday.

“The effect of a significant reduction in corn production will result in increased domestic feeding of wheat, especially lower protein levels, which will lead to a setback in US exports for the Gulf market especially,” one market source said.

“It sure looks like feed wheat should be back in the discussion again – the old adage has been ‘wheat will feed if corn lets it feed’ and with the corn production question marks, I can see where feed wheat could be a possibility,” a second US market source said.

US corn production is set to take a huge hit in the wake of poor planting progress and atrocious weather in the key Midwest production states, with some estimates expecting 10 million acres of corn plantings to be lost.

That has supported prices across the corn and wider agriculture complex, as fears that the US could be on course for a near-record crop have dissolved in the face of cataclysmic weather.

“We always feed some soft red winter wheat in southeast markets, but hard red winter feeding could see an uptick,” the second source said, with some Texas-grown wheat already heard trading into feedlots, according to the source.

Typically, wheat becomes viable for feed production when it reaches price levels around 90% of the value of corn, with the ongoing wet weather potentially leading to more wheat being sold into feed as protein is washed out.

“The quality concerns with the upcoming wheat harvest will tell the tale though – if the protein is sub-10%, I can see bushels just getting sold to feedlots with a margin, versus trying to blend up the quality,” the second source said.

While the switch is unlikely to significantly damage the balance sheets for corn, it raises the prospect of the US showing even fewer wheat volumes for export in the year ahead.

“US exports will remain active until the Black Sea harvest as… our FOB prices will struggle to compete on HRW particularly… DNS, durum and SWW, which are more difficult to replace via other origins will probably suffer a less significant setback,” the first source said.

Dark northern spring (DNS) wheat is a hard red spring wheat, while soft white wheat (SWW) is a low protein wheat from the Pacific Northwest region