QUOTE AND NEWS
Agrimoney.com  1 hr ago  Comment 
Is the hard wheat-soft wheat spread really "one of the few potentially bullish items in the grain space"? Soybeans struggle, as does cotton
Agrimoney.com  Jul 31  Comment 
Coffee was the biggest gainer of the day. But it wasn't the only one, with weather issues supporting soybeans and wheat. Cotton just can't find buyers
Agrimoney.com  Jul 31  Comment 
UK wheat is showing some unusually strong milling specifications - unlike some European crops cursed by harvest-time rains - early results show
Agrimoney.com  Jul 31  Comment 
The IGC sees a jump in EU wheat fed to livestock, in one of the first attempts to quantify quality damage. World grain stocks will hit a 15-year high
Agrimoney.com  Jul 30  Comment 
Wheat revives, lifted by concerns that sanctions against Russian could hamper its exports. Coffee gains amid growing talk of damage to Brazil's crop
Agrimoney.com  Jul 30  Comment 
Egypt's Gasc grain authority turns to Russia for all its needs at its fourth tender this month. But US wheat is offered cheaper - excluding freight
Agrimoney.com  Jul 30  Comment 
Germany's wheat harvest has yielded well so far. But dryness is needed to ensure the "desired quality", the DBV says. And more rain is in the forecast
Agrimoney.com  Jul 30  Comment 
Corn and soybean futures trade lower, as benign weather brings some staggeringly high, theoretical, US yield ideas. But signs of demand shore up wheat




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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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