April 26, 2011
 

Philippine wheat imports put off due to oversupply

 

 

Due to limited demand in the livestock and poultry industry which has led to an oversupply of grains, a group of feed millers from the Philippines has delayed the imports of feed wheat from Australia.

 

Norman Ramos, president of the Philippine Association of Feed Millers Inc. (PAFMI), said they deferred two shipments totalling 110,000 tonnes of Australian feed wheat, which would have arrived in April, because of the growing inventory of feed wheat left unused following a slowdown in the industry.

 

Ramos said warehouses were overstocked as of second week of April.

 

He said feed wheat prices remain competitive, and that the availability and prices of locally produced yellow corn are stabilising.

 

"Prices of Australian feed wheat were at US$295 per tonne, which is very high compared to the local yellow corn," Ramos, who is also the vice president and general manager of the feeds business of San Miguel Foods Inc., said, adding that the supply of the commodity would be ample for the first half of 2011.

 

To date, Bulacan yellow corn costs PHP13-13.20/kg (US$0.30-0.31), while the Batangas variety fetches PHP13.60-13.70/kg (US$0.31-0.32).

 

In 2010, the Philippines imported 1.149 million tonnes of feed wheat because of high prices of local corn. Feed wheat replaces corn in the feed formula used by the livestock industry.

 

For this year, feed millers and poultry raisers already bought 620,000 tonnes of feed wheat for delivery until June. Of the said volume, 326,000 tonnes already arrived.

 

Earlier, an industry source said that the country's wheat imports will remain relatively flat this year as the demand for both milling and feed wheat weakens.

 

According to the executive, the Philippines may import as much as 2.2.million tonnes of milling wheat and at least a million of feed wheat for 2011.

 

The flat growth would stem from weak demand for feed wheat from the livestock and poultry industries, and rising prices of bread, he said.

 

"Bread remains to be a secondary staple for Filipinos and demand drops during price increases. As for feed wheat, there are now cheaper alternatives such as cassava and local yellow corn," he said.

 

The executive pointed out that there is no reason to worry about low harvest for the corn sector, saying that there is a relatively good amount of rainfall to ensure a stable crop season.

 

"As of now, the prices of local yellow corn is stabilising, while feed wheat prices remain competitive," he said.

 

This, he said, combined with the presence of cheap subsidised Turkish wheat and continued smuggling of the commodity gives little incentive for the wheat milling industry to import more for the year.