Market Analyst Ted Seifried explains the wheat to corn ratio in relation to the commodity markets. The questions and answers are part of the Market to Market: Classroom project.
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Transcript:
Pearson: Commodity question of the week, Ted. Could you tell us what the wheat to corn price ratio means? And it is important? Do you care?
Seifried: I mean, do I care? Yeah, sure. So the wheat to corn price ratio is the same thing as the corn to soybean, which is the more popular one that we talk about. So, okay, wheat trading where it is right now, how many times do we have to multiply that and how many times do we have to multiply corn to get to the same number? So where do you have wheat at?
Pearson: Wheat is at, July wheat, new crop $4.56 versus $3.80 for corn so we're at 1 to 3?
Seifried: Right. So, the thing there, the tighter that gets, the closer corn gets to the wheat price, the less likely it is we're going to plant more wheat acres and also the more likely it is that we're going to use wheat for feed. But the higher wheat is compared to corn the less likely we're going to use what for feed, which is very beneficial for corn because corn has lost a lot of feed demand to wheat in the last couple of years. So that is why we watch it and that's why we look at it for acreage, we look at it for the demand side of things although, again, the one that is looked at more commonly is the corn to soybean ratio. That is one that I think we talk about on a daily basis especially when we're getting into acres decisions like we are right now. But we always look at the comparison between crops for different reasons. But right now acreage is the main one.
Pearson: Perfect. Well, Ted Seifried, thank you so much for taking the time to join us this week.
Seifried: Absolutely. My pleasure.
Ask the Analyst: Wheat to corn Ratios iowa state football
Market Analyst Ted Seifried explains the wheat to corn ratio in relation to the commodity markets. The questions and answers are part of the Market to Market: Classroom project.
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