QUOTE AND NEWS
Agrimoney.com  Sep 1  Comment 
This year's rain-beset crop of soft red winter wheat - the type traded in Chicago - is the worst in at least 20 years, on key quality measures
Agrimoney.com  Sep 1  Comment 
An Egyptian tender underlines the low cost of Black Sea wheat. But soybean prices get a boost from rallying oil markets
Agrimoney.com  Sep 1  Comment 
Wheat futures manage a firm start to September, helped by concerns over dryness in Russia. But China factors weigh on corn and soy, and on crude too
Agrimoney.com  Aug 28  Comment 
An Egyptian tender uncovers the low cost of Black Sea wheat, but soybeans get a boost from rallying oil prices
Agrimoney.com  Aug 28  Comment 
The offer highlights the competitiveness of Black Sea supplies - deepening fears over logistics in France, which is struggling to shift a huge harvest
Agrimoney.com  Aug 28  Comment 
Official data show the German wheat harvest falling less far than had been thought, while France's corn crop shows a rare condition improvement
The Hindu Business Line  Aug 28  Comment 
Soaps, noodles and even fairness creams jostle for space with subsidised wheat and kerosene, as Future Group takes its retail battle to fair price shops in Rajasthan
Agrimoney.com  Aug 27  Comment 
Improved Aussie crop ideas spread from wheat, whose premium to Chicago prices has halved, to chickpeas - for which output could hit historic highs
Agrimoney.com  Aug 27  Comment 
Gasc buys wheat at the lowest price in years from Russia, which has vowed to corner the Egyptian import market - the world's largest
Agrimoney.com  Aug 27  Comment 
The EU's third-largest wheat producer remains on course for a harvest strong on yield and quality, despite rains of nearly triple average levels




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This article describes a specific commodity. For grains prices in general, see the article on Grains Prices. For specific futures contracts, see the below section on wheat futures contracts.

Wheat is a commodity input that goes into many food products, from pasta to bread to baked sweets. Wheat futures on Chicago's commodities exchange more than doubled in September 2007 compared to the previous year, going from $3.95 a bushel to nearly $9. What's driving up wheat prices is a matter of simple supply and demand, as bad weather, including a spate of hurricanes, have created shortages of this important grain.

A more fundamental problem compounding the recent effects of bad weather is that farmers are increasingly switching to grow corn because of the skyrocketing demand for the ethanol-producing grain.

The chart at left shows continuous front-month futures contracts for Wheat traded on the Chicago Board of Trade (CBOT) in cents per bushel.

Map of Where Wheat is Produced

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Companies Suffering from Rising Wheat Prices

Wheat is a truly global commodity input, as it is used for bread and pasta in Western countries and noodles in Asian countries. When wheat prices rise, companies are faced with the dilemma of taking a hit to gross margins or passing on cost increases to the consumer, which often decreases demand.

  • Sara Lee (NYSE:SLE) and Campbell Soup (NYSE:CPB) are both producers of baked goods, especially bread. Wheat flour is the main ingredient in most baked goods. Sara Lee had acquired instruments to hedge against rising wheat prices, but prices rose above expected increases.
  • Kellogg (NYSE:K), General Mills (NYSE:GIS), Kraft Foods (NYSE:KFT), PepsiCo's (NYSE:PEP) Quaker Foods, and Nestle (Public, VTX:NESN) are all major producers of breakfast cereals, most of which are made partly from wheat.
  • Kraft Foods and PepsiCo's Frito-Lay are the largest multinational snack companies. Many of the products manufactured by these companies, including corn chips, cookies, and crackers, are made primarily of grain products.

Japanese Companies

Wheat Futures Contracts

See Also

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