September 15, 2011

CBOT wheat rebounds on high corn prices

CBOT wheat prices rebounded on September 14 amid speculation that livestock producers are looking for a substitute to more expensive corn, according to a Bloomberg report.

Wheat futures for December delivery were US$0.21 a bushel cheaper than the comparable corn contract yesterday (Sep 14) in Chicago, the biggest discount since at least 1959. Wheat usually trades at a premium to corn. About 240 million bushels of wheat will be in feed and residual use this year, 80% more than last year, the US estimated on September 12. Corn prices have gained 46% in the past year after adverse weather hurt the US crop.

"We'll see more switching to wheat for feed purposes" at current prices, said a senior market strategist at MF Global Holdings Inc. in Chicago, said. "We should see demand pick up."

Wheat futures for December delivery rose 2.5 cents, or 0.4%, to settle at US$7 a bushel at 1:15 pm on the CBOT, the first gain since September 2. Yesterday, the price touched US$6.9, the lowest for a most-active contract since August 9. The commodity has dropped 4.3% in the past 12 months.

Wheat is the fourth-largest US crop, valued at US$13 billion in 2010, behind corn, soy and hay, government data show.