* Tyson used wheat in feed until CBOT wheat rally in May
* USDA, some analysts still see rise in '12/13 wheat feeding
* Wheat competitive with corn in U.S. Southeast cash market
By Julie Ingwersen and Theopolis Waters
CHICAGO, June 11 Tyson Foods Inc, the
largest poultry company in the United States, has stopped using
wheat in its feed rations due to prices rising above those for
Tyson joins some livestock and poultry producers in ending
the use of wheat as feed that began about a year ago when wheat
prices fell below corn's for the first time in 15 years.
"We bought some wheat earlier this spring but are not
currently buying any due to the higher price levels," Tyson
spokesman Gary Mickelson recently told Reuters.
"If the price spread between wheat and corn narrows some
more, we may work it back into our feed ingredient formula."
The prospect of livestock feeders using less wheat and more
corn threatens U.S. corn supplies that are already set to drop
to their lowest level in 16 years this summer. But some analysts
say wheat's exclusion from feed rations will be short-lived.
"I think we will do significant feeding of wheat compared to
last year," said Jim Robb, director of the Livestock Marketing
Information Center in Denver, Colorado.
"In terms of order of importance, it will be poultry, then
hogs, then feedlot cattle," Robb said.
The U.S. Department of Agriculture has projected feed and
residual use of U.S. wheat for the 2012/13 marketing year that
began June 1 at 230 million bushels, a 50 million-bushel rise
from the previous year and the highest level in four years.
Until last year, Chicago Board of Trade wheat futures had
not fallen below the price of corn for 15 years. But since June
2011, wheat has traded close to corn, often dipping below corn
futures due to historically tight corn supplies.
That trend shifted in May as CBOT nearby contract for wheat
gained sharply, rebuilding its premium over corn as commodity
funds covered short positions in wheat, part of a broad move to
limit exposure to commodities and other risky assets. Worries
about crop damage in Russia added support.
Spot CBOT wheat futures moved from a discount to corn
of nearly 59 cents per bushel on May 7, to a premium of
more than $1 a bushel over corn by May 25. Wheat's premium to
corn has since eroded to about 38 cents a bushel.
WHEAT COMPETITIVELY PRICED IN SOUTHEAST
As the harvest of soft red winter wheat progresses in the
southern and eastern Midwest, wheat is competitive with corn on
the cash market. In North Carolina, for example, cash prices for
soft red winter wheat last week were as much as 75 cents per
bushel cheaper than spot corn.
Adding to wheat's value, a standard bushel of wheat weighs
60 lbs while a bushel of corn weighs 56 lbs.
As a result, wheat is finding favor with operations like
North Carolina-based Prestage Farms, which feeds about 3.5
million hogs and 15 million turkeys per year.
"Right now, we are buying more wheat than normal, only
because for us, we had a very good-yielding, local wheat crop,"
Prestage Farms senior vice president John Prestage said.
"Whichever one we can buy the most of at the cheapest price
per pound relative to the other, that's the one we'll always
feed the most of," said Prestage.