Wheat tumbles, dipping below corn for first time since 2013 on stock hangover

US wheat futures have tumbled, falling below corn prices briefly Tuesday for the first time since 2013, as the combination of lack of demand by cash-strapped buyers and ample stockpiles put downward pressure on prices.

There are massive stockpiles in major producing countries as the harvest of winter wheat approaches in Russia, the EU and the US, which should only increase excess supply in the months ahead.  

“With Russia and EU both trying to sell old crop hangover and new crop harvests of wheat, world values are under pressure,” Jeff McPike of Waseda Commodities told Agricensus.

“The US still commands a massive premium to world wheat values, so I'm not surprised to see some of that huge premium being released as the harvest nears,” McPike added.

By 1225 Eastern time, the Kansas HRW July contract was down 37 c/bu at $7.82/bu with September down 35 c/bu at $7.79/bu.

The Chicago SRW July and September contracts were down 23 c/bu at $5.93/bu and $6.07/bu, respectively.

July corn futures were down 12 c/bu at $5.92/bu in Chicago, just a shade lower than SRW wheat. 

“This just goes to show the trade looks for USDA to report a high SRW wheat yield when updated next month,” senior grain and oilseed commodity analyst at Futures International Terry Reilly told Agricensus. 

“Demand is just plain awful,” Charlie Sernatinger of Marex Capital told Agricensus.

Many of the biggest wheat importers are short the hard currency they need to purchase wheat because rising US interest rates have left them spending scarce dollars to pay for interest on loans instead of imports, Sernatinger said.

“The Egyptians are deferring payment on wheat on grains, the Tunisians don’t have dollars, the Pakistanis are a mess, the Turks are seeing the lira crash and burn again after Erdogan won reelection, the Iranians are in no danger of finding hard currency between the sofa cushions, and Bangladesh is begging India for wheat since they don’t have dollars to buy the stuff,” Sernatinger said. 

"We continue to hear the “no demand” refrain from so many buyers as they try to find demand for the stocks already in hand and decline to try and catch the falling knife," McPike said.