March 26, 2004

Malaysia Feedmillers Turns To Tapioca As Substitute For Corn

Feedmillers in Malaysia are turning to tapioca as a substitute for corn as prices continue to rise, trade officials said on Friday.

With U.S. corn prices having risen to $210 a ton C&F Southeast Asia this week, compared with less than $125 a ton C&F for Chinese corn a year ago, Malaysian feed millers are turning to cheaper cassava from Vietnam, said Suresh Chandran, technical director for Southeast Asia of the U.S. Grains Council.         

"This is being increasingly used as an energy source for feed although this can replace corn only partially," Chandran said. He added the landed cost of cassava from Vietnam in Malaysia, Southeast Asia's biggest corn importer, was working out to about $100 a ton.

Tapioca is a root starch derived from the cassava plant. Corn has a protein content of about eight to nine percent, compared with just two to three percent in tapioca, making corn the preferred ingredient. Tapioca also lacks certain pigments, considered key for the healthy growth of livestock.                             

"Even many Vietnamese feed millers are using tapioca to a larger extent now," said Chandran, who recently returned from a trip to Vietnam.    

In recent years Malaysia has been China's second-biggest corn customer, after South Korea, taking more than 90 percent of its imports of about 2.4 million tons from the Asian supplier.              

But in China, falling grain stocks have hit corn exports, forcing Malaysian buyers - also faced with extremely high freight charges from the Americas - to seek alternatives.     

"We are still focusing in this region for our needs - whether it is corn or tapioca," said one Kuala Lumpur-based grains trader. "There is not a single offer of Chinese corn now."