January 23, 2007

 

US livestock feeders to try wheat to feed
 

 

With CBOT corn futures prices at 10-year-highs, livestock feeders in the US have been looking at wheat as a feed ingredient for the summer, sources said.

 

Corn futures have rallied recently amid growing interest in ethanol and bio-diesel fuels, and on government reports that lowered US production and ending stocks estimates.

 

Livestock feed remains the number one usage for corn, but corn usage for alternative fuels has made new inroads in demand. 

 

To improve profitability, livestock industry needs to find ways to reduce feed costs. Increasing prices of corn have forced feeders to look for alternatives.

 

Wheat is lately being used as a feed ingredient instead of corn in many parts of the US, said Mark Clark, a commodity broker.

 

Despite the recent rally, livestock feeders would not start feeding wheat much until after the spring harvest, noted Derrell Peel, an extension livestock marketing specialist at Oklahoma State University. They would want to wait until then because there is a substantial cost in switching from corn to wheat, he reasoned.

 

One fear that surrounds most cattle feeders while changing their feed ingredients is uncertainly over the stability of economic conditions, said Don Close, an independent market consultant in Texas.

 

Any change in the ration throws the cattle off schedule, Close said adding it takes a minimum of two weeks to get cattle back on schedule.

 

Sources said the decision to switch feed ingredients would be made mainly on the basis of price, although some feeders might prefer to use corn for other reasons.

 

For one thing, it was easier to balance a ration with corn than with wheat, Close said. Besdies, wheat also had some inherent complications with regard to digestibility, he added.

 

Further, the milling characteristics of wheat were more complex than corn.