US wheat futures up 1.2 percent

US wheat futures rose 1.2 percent on Monday, while corn firmed to trade near last week's all-time highs as concerns over tightening grain supplies and harsh crop weather continued to buoy the grain markets. Soybeans lost more ground, pressured by expectations that US farmers would plant more soy this year after wet weather prevented them from seeding the desired corn acres.
Analysts said red-hot corn prices are prompting feed producers from the United States to China to switch to alternatives such as feed wheat in animal rations. "Corn prices are too high and livestock producers are switching from corn to feed wheat. It is a supportive factor for wheat prices," said Ker Chung Yang, a commodities analyst at Phillip Futures in Singapore.
"There are reports that in China and South Korea more feed wheat will be used instead of corn." Chicago Board of Trade July corn rose half a percent to $7.90-3/4 a bushel by 0244 GMT. The spot corn contract rose to a record high $7.99-3/4 per bushel on Friday in response to a bullish June supply/demand report from the US Department of Agriculture.
CBOT July wheat rose 1.2 percent to 7.68-1/4 a bushel while soybeans for July delivery fell 0.1 percent to $13.85-1/4 a bushel. The USDA on Thursday estimated global corn stocks for the marketing year ending August 31, 2012 at 112 million tonnes, the lowest since 2006/07, due to rising consumption in China and smaller crops in the United States.
High corn prices are spilling over to wheat, especially in the south-eastern United States, where hog and poultry producers are scrambling to cover their ffeed needs through the summer China's feed mills are using more cheap wheat as a substitute for corn, with wheat prices now 9.3 percent below corn as the wheat harvest nears, traders said on Friday.
Physical wheat in most of China's northern areas was more than 200 yuan ($31) per tonne cheaper than corn, enough to attract feed mills, and the price gap is likely to expand further after large quantities of new wheat hit the market. Last week, CBOT spot corn futures rallied to near a 40-cent premium to wheat, the widest premium since 1996. Typically, corn trades at a discount to wheat. The weather in the US Midwest, where farmers are battling excessive rains to complete corn and soy plantings, will take centrestage this week.