It is too cheap! Over the past six months, The Chicago Board of Trade wheat futures have been basing a “long-term” bottom between $4.00 and $4.25 a bushel. There has not been any supply side shortage, and we have not yet seen the demand side fundamental increase. However, the chart does indicate bottoming action and lower prices will attract new demand. The reason that I say wheat is too cheap is because the differential between wheat prices versus corn prices is too narrow. Just two years ago, the spread was $2.00 wheat over corn. More recently, the spread has been trading between .60 to .80 wheat over corn. Typically, when the spread between wheat and corn gets down to just .80 you would expect to see feed demand increase as wheat is a much better protein. The problem with trying to gauge feed usage is that it is only reported quarterly, so therefore if or when there is a big shift in demand from corn feed to wheat it could surprise traders. I expect wheat futures to rally because the price of wheat versus corn is too cheap and has been for a while now. We are also entering the period when winter wheat comes out of dormancy and weather will cause prices to rally as traders become concerned about losing crop size to dryness, too much rain, or frost damage.