Wheat

Wheat commodityWheat has been cultivated in different regions of the world for more than 9,000 years. The domestication of this plant played an important role in the development of the first cities in history, and given its multiple uses, wheat remains the staple food of a great percentage of the global population. Nowadays, wheat is the world’s third most produced grain, after corn and rice.

A brief overview of wheat trading

In the United States, wheat is a tradable commodity in the Kansas Board of Trade, the Minneapolis Grain Exchange, and the Chicago Board of Trade, where futures contracts are usually delivered in the months of March, May, July, September, and December. Wheat is also traded at the stock markets in China, Australia, Canada, India, and Japan.

The Eurozone countries are the largest producers of wheat in the world, followed by China, India, and the United States.

The prices of wheat as a commodity have been relatively stable throughout history, although seasonal price variations do occur, especially in the winter months.

Traders looking to get started in the wheat market need to understand that not all wheat types are considered tradable commodities. Only hard red winter wheat, soft red winter wheat, and hard red spring wheat are traded at the international stock markets.

The future of wheat as a commodity

Given wheat’s function as the basis of many foodstuffs, the global demand is expected to rise as the world’s population continues to increase. However, and as in the case of many other grains, wheat future prices can be significantly affected by governmental policy and changing weather patterns. Global warming has brought flooding and droughts to some of the world’s leading wheat-producing areas, like China and Australia.

Lastly, a recent US report affirms that a 17 million ton dip is expected in 2012-2013. This decrease in production will most likely bring about an increase in the prices of wheat at the major stock markets.

Read more about some of the other common commodities.