Strong demand for animal feed in Asia prompt rice supplies amid soaring wheat and corn prices

A surge in wheat and corn prices is boosting demand for low-grade rice in animal rations across Asia, pushing up prices of the world’s most important staple at a time when global food inflation is already hovering near record highs.

Global crop importers are scrambling for supplies after Russia’s invasion of Ukraine severed grain shipments from the two countries, which together account for around 25% of world wheat and 16% of world corn exports.

The price spikes in wheat and corn in turn pushed buyers to seek alternatives, including in China, by far the world’s largest feed market. Importers are buying extra volumes of broken rice – inferior rice where the grains have been fractured during the milling process – to fatten hogs and other animals, traders and analysts said.

Rice typically trades at a steep premium to wheat, but wheat’s blistering 50% price surge from a month ago has sharply cut the difference between the two grains, and even made wheat more expensive than some lower grades of rice.

“There could be greater interest in broken rice for animal feed if the strength currently dominating wheat and corn markets persists,” said Rome-based FAO rice economist Shirley Mustafa. “It is not just animal feed, there could also be a substitution in other use sectors, such as more people turning to rice for their meals.”

China had booked up to two million tonnes of Ukrainian corn imports for this year, but most of those shipments are now in jeopardy given the disruption to Ukraine’s logistics chains. To replace those lost volumes, China is expected to import around three million tonnes of broken rice, up from about two million tonnes annually in the past two years.

“Demand for Indian broken rice has gone up because of higher corn prices. Feed makers are trying to replace corn with rice,” B.V. Krishna Rao, president of India’s Rice Exporters Association, told Reuters. Prices of 100% Indian broken rice have moved up to $320 per tonne this month from $290 in February, he added.

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