China’s higher feed corn use could hit barley prices

China is using more corn in feed rations, which could result in lower feed barley prices in Western Canada, says an analyst.

“Feed mills have resumed mixing more corn in feed rations as higher prices for wheat and sorghum reduce demand for corn alternatives,” the U.S. Department of Agriculture’s Foreign Agricultural Service (FAS) said in a recent report.

Mills are using more corn due to higher Chinese production of the commodity and falling import prices.

China’s corn production in 2022-23 is pegged at 277.2 million tonnes, a 4.6 million tonne increase over the previous year.

“Feed mills report more corn in rations each month since July 2022,” according to the FAS report.

Compound feed contained an average of 35 percent corn in the first 11 months of 2022, which is four percent higher than 2021 but still well below the more traditional ratio of 50 to 55 percent.

Wheat is selling for US$55 per tonne more than corn, which has pushed wheat out of rations.

China holds contracts for 3.7 million tonnes of U.S. corn for delivery in 2022-23, 70 percent less than the same time last year.

The country is instead turning to Brazil for its corn imports, said the FAS.

China recently relaxed its phytosanitary protocol regarding Brazilian corn, approving more than 130 Brazilian facilities for export in October 2022.

Brazilian corn was about $23 per tonne cheaper than U.S. corn for January delivery.

Brennan Turner, an independent grain industry analyst, thinks the rise in corn use in China could hurt Canadian feed barley exports to that country.

“There’s a good chance it could pull back a little bit,” he said.

Strong exports to China have helped keep Canadian feed barley prices elevated.

Turner also thinks there will be more price pressure from U.S. corn in Alberta’s feedlot alley as Brazil continues to displace U.S. corn in China.

He doesn’t expect increased Chinese corn demand to have much impact on Canadian wheat prices.

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