Wheat is a cereal crop (like corn, rice, millet, barley, rye, oat) and belongs to the family of bromes (Poaceae). The first kinds of wheat cultivated by men in the Middle East (or, formerly more common, the Near East) were einkorn wheat and wild emmer. The oldest findings of huskless wheat date back to 7800-5200 BC. Therefore, wheat is the second-oldest cereal crop after barley. The triumphal march of wheat began in the 11th century with the emerging white bread. The primary use for wheat is flour, the key ingredient in breads, pastas, crackers and many other food products. Wheat by-products are also used in livestock feeds. Wheat has significant industrial applications, too, as an ingredient in starches, adhesives, and coatings. Today wheat is the most cultivated cereal crop and occupies the largest cereal acreages.
The different kinds of wheat constitute the second-most cultivated cereal of the world (after corn but before rice). The different kinds of wheat are traded on different futures exchanges, depending on sowing date and climate zones. The “Soft Red Winter Wheat” is traded at the Chicago Board of Trade (CBOT), while the “Hard Red Winter Wheat” is traded at the Kansas City Board of Trade (KCBT). At this only the kinds of wheat cultivated in the U.S.A. are considered. Therefore these kinds of wheat are popularly denoted by their cultivation area: Kansas-durum wheat (region: Kansas, Texas, Nebraska, Oklahoma) and the Chicago-soft wheat (Illinois, Missouri).
The worldwide annual production of about 630 million tons is covering roughly one-fifth of the world-population’s required calories. The flour of the Chicago-wheat is predominantly used for cakes, cookies, snacks and crackers; the Kansas-wheat especially for bread and pastas. The steadily rising oil prices generate a demand for cereals that are used for the production of bio fuels (ethanol).
The biggest producers of wheat are China, India, the U.S.A. and France. Germany is only ranked at 8th place, but can show an average harvest of about 7.5 tons (t) per hectare (ha). Compared to that, the global average is only 2.9 t/ha. Biggest exporters are above all Argentina, Australia, the EU, Canada and the U.S.A. Next to Russia are Asian Countries the biggest importers.
The weather is the most important factor of influence on the supply situation for agricultural products. Dry weather and long persistent drought can have great impact on supplies and prices, as well as extremely wet periods, extreme temperature fluctuations or environmental disasters. Further important influence factors are: The seasonal growing– and harvesting rhythm (price-lows often in the harvesting months in summer), the already mentioned demand for bio fuels and the influence from the side of politics (keywords like: subsidies or restrictions on trading).
Most important trading places for the Soft Red Winter Wheat is the Chicago Board of Trade (CBOT), for the Hard Red Winter Wheat it is the Kansas City Board of Trade (KCBT). The traded contracts are quoted in U.S. Cents per bushel (bu.) at both trading places, whereby a contract comprises 5,000 bu.
Most important stock exchange centers: for Soft Red Winter Wheat: CBOT
Most important stock exchange centers: for Hard Red Winter Wheat: KCBT
Contract-cycles: March, May, July, September, December.
Contract-size: 5,000 bu.
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