Wheat is the world’s second most widely produced cereal crop next to corn and is one of the most promising commodities today. It is primarily used for the production of flour and livestock feeds with China, India, USA, Russia and France being the world’s top global suppliers. Originating from the Levant region of the Near East and Ethiopian Highlands it is now globally cultivated and is grown on more land area than any other crop for commercial use. This commodity has a variety of types such as hard red winter which primarily used for making bread, soft red winter which is used for making pastries and spring wheat for making flour. These different wheat types also have different planting seasons to get better harvests so the timing has a great impact on the production of this major commodity. Aside from being harvested as food for both humans and animals, wheat also has a great potential for being a source of bio fuel aside from corn and soybeans.
The value of wheat
There are many factors that can affect the global price of wheat. The United States Department of Agriculture or USDA for example always makes a comprehensive report on how much of this crop will be planted in agricultural lands to make projections whether there will be a deficit in the supply of wheat. This however is not accurate at all times. Aside from this prediction, other factors like the weather, poor harvests and crop infestations can also have a great effect on the production of this crop which in turn could trigger an increase of its price. Higher acreage estimates on the other hand can depreciate the value of wheat in various commodity exchanges.
Aside from being a staple, wheat is also fast becoming to be a major source of ethanol for biofuels which is the popular alternative to petrol. The need for increased energy security makes bio fuel a good candidate and this alone can have a major impact on the future of wheat commodities since the interest in these contracts is dramatically increasing. And with the rapid increase in global population, this translates to a growing demand for wheat as well.
Types & markets for trading wheat
The three major types of wheat that are grown in the US are grown and traded on different markets where the hard red winter wheat is traded on the Kansas City Board of Trade. The soft red winter wheat is traded on the Chicago Board of Trade while the spring wheat on the other hand trades on the Minneapolis Grain Exchange.
Getting updated information about the current trends in the wheat market can be very useful in making better trading decisions. It is also best to identify trends in the wheat industry and in the wheat futures market so you can make the odds in your favour. With the use of our recommended binary options trading platforms you will be more informed and have better chances of making a good trade for these underlying assets.