June 13, 2011

 

Philippine wheat purchase to halt

 

 

Philippine feed millers have secured transactions for the supply of 600,000 tonnes of feed wheat early this year and are not intending to purchase more for the rest of 2011 due to higher production and consistent local corn prices, an industry official said.

 

The Southeast Asian country's feed wheat purchases this year could be limited to just about two-thirds of the 2010 volume of 900,000 tonnes, Norman Ramos, president of the Philippine Association of Feed Millers Inc (PAFMI), said on Thursday (Jun 9).

 

"At this point, none," he said when asked if the industry group's members have plans to import more feed wheat this year.

 

"If domestic corn prices remain stable and supply is higher, 600,000 tonnes will be more than enough. There will be no need to import more feed wheat," he said.

 

Ramos did not say when exactly the contracts were forged, but said the last feed wheat shipment was expected in July. The cargoes came mostly from Australia, he said.

 

In February, traders said Manila snapped up cargoes of at least 200,000 tonnes of Australian feed wheat at US$285-315/tonne, C&F, and was in talks for deals of up to 400,000 tonnes.

 

The supply contracts were forged before the government gave last month more optimistic forecasts on corn production this year, industry officials said.

 

Manila expects corn production in January-September to reach 5.66 million tonnes, 19.6% higher compared to the year-earlier output because of expanded corn acreage.

 

Better rains, after a drier-than-usual weather in 2010 caused by the El Nino phenomenon, and increased acreage are boosting crop output in the Philippines, with corn up 19.5% to 1.91 million tonnes in the first quarter from a year ago.

 

"After the El Nino, there has been some recovery. The government's forecasts of higher corn production will put a damper on feed wheat importation," Ramos said.

 

However, he said next year's import volume would depend on how wheat prices behave relative to the local price of corn.

 

"The feed millers will grab any opportunity to bring in cheap feed wheat," Ramos said. "But we have been working closely with local corn producers and the objective really is to keep prices stable and the supply year-round adequate."

 

Analysts see Russia's move to lift a ban on grain exports easing tight feed supplies in Asia, but concerns over harsh weather in top exporters, the US and Europe, will keep buyers worried about high-protein wheat production.