Yes, amaranth cultivation was discouraged by the Spanish because it was considered an "evil twin" of the wheat used to make the Eucharist.
From the 2021 dissertation Agricultural Productivity and Human-Landscape Dynamics in the Early Basin of Mexico:
Besides its importance in resource provisioning, amaranth also played an important role in the ritual economy. At the trecena festivals held at the beginning of each month, the Aztec would create statues of their god Huitzilopochtli out of popped amaranth seed glued with concentrated maguey sap. The statue would then be consumed by the festival participants at the end of the rituals. It is quite likely that this ancient important ritual is the reason why amaranth is so scarce today. (1, 2)
Within the Central Highlands, the only community with a demonstrated unbroken tradition of amaranth cultivation is Tulyehualco, Xochimilco. There, local tradition states that upon arriving in the New World, the Spanish were disturbed to see the close parallels between the amaranth rituals and Christian communion where the body of Christ in grain form is consumed during a monthly ritual commemorating his sacrifice. According to the Tulyehualqueños, the Spanish believed this to be a sign that amaranth was a satanic food and banned---or at least strongly discouraged---its consumption and cultivation. At the time Tulyehualco was a remote village surrounded by swamplands and formidable slopes making it difficult for the Spanish to fully control the area, allowing a trace of amaranth production to survive. Some of this amaranth managed to make its way into the broader Mexico City market in the form of alegrías (`happinesses')---traditional rectangular or squat-cylindrical candies made in the same way as Huitzilopochtli statues. This was tolerated by the Spanish authorities, so long as its vendors also sold the Christian wheat-derived oblea (communion wafer).
(1) Broda, Johanna, and Aurora Montúfar López (2013). "Figuritas de amaranto en ofrendas mesoamericanas de petición de lluvias en Temalcatzingo, Guerrero." In Identidad a través de la cultura alimentaria, edited by Martha Alicia Salazar, pp. 167–188. Comisión Nacional para el Conocimiento y Uso de la Bioversidad, México D.F.
(2) Montúfar López, Aurora. (2012). "Amaranto (Amaranthus spp.), planta ritual mesoamericana." In Espitia Rangel, E., editor, Amaranto: Ciencia y Technologia, pages 3–13. Instituto Nacional de Investigaciones Forestales, Agrícolas, y Pecuarias, Celaya, Guanajuato.