S Korea’s MFG probes switch from corn with feed wheat tender

South Korea’s feed maker MFG has tendered for feed wheat looking for new crop, Black Sea supply for September 5 arrival, according to market sources.

Cargill is believed to have sold a 65,000 mt cargo at $214.24/mt CFR, according to one source. 

The move sees a feed manufacturer probing the narrowing differential between corn and feed wheat, with sources indicating that MFG was looking for a price that is low enough to make the switch viable.

South Korea's feed makers bought wheat earlier this week, with market sources attributing that to buying to meet their regular need, rather than an effort to optimise feed wheat over corn.

“The possibility is that they will pass if they find a really cheap offer does not come out, so this tender you can think as (MFG) trying to consider switching away from corn,” one market source said, noting that the spread between corn and feed wheat “is narrowing”.

“In Ukraine, the spread between corn and feed wheat is not more than $10/mt for July,” a Black Sea source said, with Black Sea-North Asia freight estimated at around $30/mt, or an FOB Black Sea equivalent price of around $179/mt.

According to Agricensus data, APM-11 FOB Ukraine HIPP vessels loading in July were assessed at $177/mt Thursday, with APM-1 FOB Ukraine feed wheat assessed at $175/mt – versus a $40 premium for feed wheat over corn for prompt loading.

“NOFI has firm demand – they always need to buy feed wheat regardless of the corn/wheat price spread, but others are quite flexible,” one market source said, with NOFI the biggest feed manufacturer in the Korean market.

The tender was for 55,000-70,000 mt of feed wheat from the Black Sea with a full month July shipment and arrival on September 5 into the ports of Kunsan and Pyeontaek.