For the first time in 15 years, wheat prices fell below those for corn on April 12, opening the door wider for wheat to become fodder for livestock and poultry.
Soft red winter wheat futures briefly traded below prices for corn at the Chicago Board of Trade, the pinnacle of corn’s climb to record highs recently amid dwindling U.S. supplies.
Analysts said the poultry sector had already begun using some wheat for feed in the run-up to the price parity and that more wheat could now be added to the feed ration.
Strong demand for corn from the ethanol, export and livestock markets pushed CBOT corn prices to an all-time high amid the tightest stocks since the 1930s.
“The Southeast is already buying wheat as fast and as fur ious as they can,” said Roy Huckabay with the Linn Group, a Chicago brokerage, referring to the hub of the poultry sector.
“There is still wheat coming in from Canada too. It started in February and early March,” he said, of large Canadian feed wheat shipments into the U.S. East Coast.
Worries that cold and rainy weather was delaying corn planting in the U.S. Midwest suggested that supplies may remain tight beyond the summer, when users may be scraping the bottoms of grain bins awaiting the next harvest.
Wheat, meanwhile, has struggled to hold recent gains amid dull demand for the soft red winter wheat variety traded in Chicago and as U.S. farmers prepare to harvest the largest SRW crop in three years and the second largest since 2000.
Corn in the cash market has already been trading at a premium, pound for pound, to cash wheat in some areas of the country.
But despite the price disparity, livestock and poultry producers are normally reluctant to adjust feed rations.
“Pigs don’t like variety,” said Ron Plain, livestock analyst at the University of Missouri. “As a general rule you will only switch to wheat if you’ve got enough to feed for a while. I’d say at least a month’s worth of feeding.
“You would not want to switch for a week and switch back. The animal performance is likely to cost you more than the savings in price.”
Poultry producers also cautiously adjust feed rations.