Recently, wheat futures price has been going through highs and lows, particularly the latter. Some do not understand that, however.
They believed that wheat is a renewable resource and should just be there all the time. These assumptions are false, because, while wheat can be grown almost anywhere, it is only grown in gross amounts in places like Russia and China.
Wheat goes into more merchandise than what the average person thinks. It is used in cereals, oatmeal, and also in bread-making. Without all these things many countries may not be what it used to be, so as you can see, it is a very important resource.
Daily Wheat Prices (MGE)
What Affects Wheat Futures Price?
Russia has recently been hit by many fires and droughts, both of which have wiped out one third of the entire wheat harvest for this year. Authorities have banned the exportation of wheat until the next harvest. This shows how badly a natural disaster can harm specific crops–such as wheat–and their prices.
War can be a big factor as well. The externalities of war can have a pretty significant effect on wheat prices (not to mention a thousand other things). Depending on which countries are having it and who is on whose side,wheat futures price varies.
If you are fighting a country whose wheat production is one of the world’s largest, they probably would not want to give you any of their supply. Therefore, the wheat futures price goes up, because you are not getting as much as you are used to.
Also, weather can be a huge factor, as is seen by the Russian government and everyone that Russia normally exports to.
Not only can all your crops burn to nothing from drought or extreme temperatures, but they can be swept away by either too much water (who knew?) such as flooding and excessive rain, and there have even been instances where the temperature drops drastically and the wheat simply does not survive the frost.
World’s Wheat Producers
China is the world’s largest producer of wheat with a very large production of 108,712 thousand metric tons (TMT) of wheat every year. With a population of 1.2 billion people, it is also one of the largest consumers of wheat and the world’s seventh largest importer of wheat.
India is the worlds second largest wheat producer, producing 65,856 TMT of wheat per year and they consume 65,283 TMT.
The United States is the fourth largest consumer of wheat (35,704 TMT) and the world’s third largest wheat producers (62,550 TMT).
With a groundbreaking 28,547 TMT, United States is the world’s largest wheat exporter. The fact that the United States is the world’s biggest exporter says something. This gives the United States a little leverage over the wheat futures price, because they do give the world the most wheat out of every other country out there.
Not only that though, it would hit the world wheat futures price if the crops in United States are reduced to nothing.
It could also give United States a little leverage over the other countries during negotiations. If there is another country that is hostile to United States, they have the option of not selling to the hostile country or upping the price.
If anyone ever wants to start something, we are only human, and can use whatever we have to our advantage, one of those things being the wheat futures price.