The Kansas City Board of Trade (KCBT) December wheat contract price is about 43 cents higher than the KCBT March contract price.

This implies that Kansas City wheat prices are expected to increase 43 cents between now and December.

The Chicago Board of Trade (CBT) December corn contract price is $1.36 less than the CBT March corn contract price. This implies that the Chicago corn price is expected to decline $1.36 between now and December.

Given that corn prices have been supporting wheat prices and given that the livestock industry continually evaluates the economics of feeding wheat instead of corn, can corn prices decline $1.36 while wheat prices increase 43 cents?

The market is telling us the hard red winter (HRW) wheat price will increase while corn prices decline. This market phenomenon is predicated on the premise that wheat stocks will continue to be relatively tight while corn stocks become abundant.

In the January USDA WASDE (World Agricultural Supply and Demand Estimates) report, U.S. wheat ending stocks were projected to be 716 million bushels. The five-year average is 791 million bushels.

World wheat ending stocks were projected to be 6.5 billion bushels compared to a five-year average of 6.9 billion bushels. Wheat stocks are projected to be below average but not by much.

United States corn ending stocks were projected to be 602 million bushels compared to a five-year average of 1.2 billion bushels.

World corn ending stocks were projected to be 4.6 billion bushels compared to a five-year average of 5.2 billion.