The Farm CPA
Paul is now part of the fourth generation in America that is involved in farming and hopes the next generation will be involved also. Through his blog he provides analysis and insight to farmer tax questions.
Corn Price is Now Higher Than Wheat!
Aug 10, 2011
Historically, wheat prices have generally been higher than corn prices and sometimes the difference can be major. In many years, wheat could be $1 or $2 higher than corn. This is due to two main reasons:
- Corn was primarily used for feed
- Wheat was more heavily used for bread and other products directly consumed as food
- A bushel of wheat also provides slightly greater feed value than a bushel of corn
However, during many days in 2011, corn has now overtaken wheat in price. This has been caused by these major factors:
- The Ethanol mandate requires almost 5 billion bushels of corn to be used
- China has rapidly increased their imports of corn
- Wheat is in plentiful supply and corn may have its lowest carryover in many years
In a recent Wall Street Journal article, it mentioned that due to this flip-flop in prices, many consumers of corn for feed such as poultry and hog producers are now blending in more wheat into their feed rations. Also, wheat can be used to make Ethanol and some Ethanol producers are now blending about 5% wheat into their mix.
As long as wheat remains cheaper than corn, this trend may continue.