The world is swimming in wheat, much to the dismay of farmers. This year’s global wheat harvest is projected to be the largest ever, and stockpiles are expected to reach an all-time high near 240 million tons worldwide. This oversupply has pulled prices sharply lower, cutting prices almost in half over the last two years.
Without a major supply disruption, like a drought or disease, it is likely that wheat supplies will remain large for a long time, as there have been few signs of increasing demand. Unlike corn and soybeans, which are heavily consumed by livestock, wheat is mainly used to feed humans, who aren’t likely to drastically increase wheat consumption without a major cultural shift.
As of midday Friday, March Kansas City wheat was worth $4.48 per bushel, while March Chicago wheat traded for $4.61. Higher-protein KC wheat is usually more valuable, but heavy global supplies are dragging it down relative to Chicago wheat prices.