QUOTE AND NEWS
Agriculture Online  3 hrs ago  Comment 
Byline: Mike McGinnis DES MOINES, Iowa — On Monday, the USDA dropped the U.S. winter wheat conditions, as cold weather continues to grip the Plains states. In its Weekly Crop Progress Report, the USDA rated the U.S....
The Hindu Business Line  9 hrs ago  Comment 
Unseasonal rains across northern parts of the country could impact wheat harvest in key producing States such as Punjab and Haryana and triggerquality
Mondo Visione  11 hrs ago  Comment 
The European Securities and Markets Authority (ESMA) has published today three opinions on position limits regarding commodity derivatives under the Markets in Financial Instruments Directive and Regulation (MiFID II/MIFIR).  ESMA’s...
The Economic Times  Apr 5  Comment 
Many truck unions in Punjab are opposed to the state government's fiscal austerity measures; their boycotts threaten to disrupt wheat procurement in the upcoming rabi marketing season.
The Hindu Business Line  Apr 4  Comment 
With the domestic production of wheat projected to dip by 3 million tonnes (mt) from the official estimates of 97 mt, India may import 1.5 mt of wheat
Financial Times  Apr 4  Comment 
Black Sea agricultural derivative has succeeded where previous attempts failed
Agrimoney.com  Apr 3  Comment 
Cocoa, the top ag performer of March, struggles in the new month, while wheat futures regain risk premium. China worries weigh on soy, corn
Agrimoney.com  Apr 3  Comment 
Official data show a further decline in the key, drought-hit Kansas crop, despite recent showers, and with the prospect of further weather tests ahead
Agrimoney.com  Apr 3  Comment 
Markets Extra gives extra details on official ratings for winter wheat in major growing states
Agrimoney.com  Mar 29  Comment 
That said, it is not high profile soft or hard red winter wheat types which lead the improvement. Data on US soybean exports sales are less reassuring




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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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