* Indonesia, Thailand buy large volumes of feed wheat
* Lack of Brazilian corn supplies boosts wheat shipments
* Indonesian move to limit corn imports also driving wheat
demand
By Naveen Thukral
SINGAPORE, June 2 (Reuters) - Asian mills that churn out
animal feed are buying large volumes of wheat for a second year,
shifting away from corn as supplies of that grain dwindle
following drought in key exporter Brazil.
Indonesia has bought over 1 million tonnes of feed wheat
this year, while Thailand has locked in close to 2 million
tonnes with the country booking cargoes right up to December,
according to three trade sources. That compares to limited
shipments a couple of years ago.
Strong Asian appetite for feed wheat is good news for major
producers such as the Black Sea region and Argentina, and has
narrowed the spread between prices for the grain and milling
wheat, used to make flour for human consumption.
"The demand for feed wheat is so strong in Asia that it has
narrowed the spread between milling and feed wheat to
historically low levels," said a Singapore-based trader who
sells Black Sea and Canadian wheat in Asia.
New-crop Ukrainian feed wheat with 10.5-percent protein is
being quoted at $170 a tonne, on a free on board basis, for
August shipment. That is just $8 below $178 quoted for milling
wheat with 12.5-percent protein. The spread was around $20 a
couple of years ago.
Thailand last week bought 60,000 tonnes of Black Sea feed
wheat for $187 a tonne, including cost and freight, for August
shipment, trade sources said.
Most feed makers are taking Ukrainian shipments, although
some Argentinian and French cargoes have also made their way to
Asia. About 400,000 tonnes of shipments from Argentina have
landed since January, according to traders.
Vietnam, which typically prefers corn to feed wheat, is also
likely to be forced to switch to more wheat.
"Vietnam will most likely take European feed wheat, either
from France or Bulgaria," said a second Singapore trader. The
traders declined to be identified as they are not authorised to
speak with media.
CHANGING TIMES
Southeast Asia feedlots usually prefer Brazilian corn for
its darker colour and harder texture compared with U.S. grains.
"There is a myth in Southeast Asia that darker corn will be
better for the cattle," the first trader said.
But Brazilian supplies have dropped in recent months after
drought hit output, forcing the country to turn into a net
importer of the grain.
Measures by Indonesia to reduce corn imports have also
boosted feed wheat demand.
Indonesia decided in April to cap corn imports for feed
mills at 1 million tonnes, but local corn supplies haven't been
able to meet booming demand in Southeast Asia's largest economy,
prompting inflows of feed wheat.