U.S. ethanol producer The Andersons Inc. is mixing wheat into its corn-based biofuel in an effort to cut costs and diversify its supplier sources while fighting an increasing shortage in corn supplies.

Andersons is mixing soft red winter wheat along with corn to produce the biofuel, according to Neill McKinstray, vice president and general manager of the company's ethanol division. According to Newedge analyst Dan Cekander, nearby July wheat futures remain about 20 cents cheaper than nearby corn futures.

"With wheat cheaper than corn, they will likely continue to fit it into their mix to the extent their equipment will allow," said Rich Feltes, an analyst at Chicago's R.J. O'Brien. "Ohio soft red wheat harvest is peaking, and the stuff is available and people are looking for homes for the good harvest."

Analysts expect the company to continue the wheat mixing strategy until a new corn harvest crop comes in October.