In 2022-23, global wheat production reached over 781 million metric tons, securing its place as one of the world’s most consumed grains, second only to rice. Wheat remains a crucial dietary staple for numerous regions, providing 20% of the global population’s daily protein intake. Its ability to grow in various soils and climates significantly contributes to its widespread consumption.

The largest wheat exporters include countries such as Russia, the United States, Canada, France, and Ukraine. On the other hand, the biggest importers of wheat are typically countries like Egypt, Indonesia, Turkey, and the Philippines.

To support traders interested in this vital agricultural commodity, TFG has updated its comprehensive guide on understanding wheat and its role in the global market, including information on the major importers and exporters.

The Many Uses of Wheat

Unsurprisingly, the main demand for wheat comes from human consumption. In fact, over two-thirds of wheat produced globally is used as food. It contains many vitamins and minerals which make it a staple food product. It’s used in premium bread making, general purpose bread making, biscuit and cake making, and as animal feed.

Although foodstuffs represent the main use of wheat, it also has several alternative uses. The gluten and starch present in wheat make it elastic and able to bind water. This makes wheat useful for products like:

1. Animal feed:
   • A portion of wheat production is allocated for animal feed, particularly for poultry and livestock.
   • Wheat middlings, a byproduct of flour milling, are commonly used in animal feed due to their high protein content.
2. Biofuel:
   • Wheat can be used to produce ethanol, a biofuel that can replace or supplement gasoline.
   • In 2020, around 5% of global wheat production was dedicated to ethanol production
3. Bioplastics:
   • Wheat straw and chaff can be used as a raw material to create biodegradable plastics.
   • These bioplastics offer an environmentally friendly alternative to traditional petroleum-based plastics.
4. Paper production:
   • Wheat straw can be used in paper production as an alternative to wood pulp.
   • This helps reduce deforestation and contributes to more sustainable paper production.
5. Construction materials:
   • Wheat straw can be processed into building materials like straw bale and particleboard.
   • These materials offer insulation, soundproofing, and environmental benefits compared to conventional construction materials.
6. Industrial absorbents:
   • Wheat straw and chaff can be used as absorbent materials for oil spills and other industrial applications.
   • They provide a natural and cost-effective alternative to synthetic absorbents.

Wheat Market Overview

The wheat market is volatile and subject to weather patterns which influence yields. For this reason, price changes are difficult to predict.

On the supply side, countries in the Black Sea region are continuing to increase their production of wheat. The region, which made up less than 10% of the global grains market in the early 2000s, now makes up 25%.

The demand for biofuel is up and expected to continue to rise due to China’s clean energy targets that are being rolled out over the coming years. This could lead to more acreage being given to corn and less to wheat.

If wheat becomes the grain of choice in growing economies, demand may continue to grow. However, wheat is facing competition from other feed grains such as corn and it’s speculated that this may slow growth in the years to come.

For a more in-depth overview of wheat prices in 2023/24, see the USDA publication on Grain: World Markets and Trade here.

What Drives the Price Of Wheat?

The 5 main trade factors that drive the price of wheat are listed in the table below:

How Is Wheat Traded and Financed?

Wheat Trading

There are multiple ways to invest in wheat. Traders can invest through wheat shares, wheat CFDs, wheat ETFs, wheat futures, and wheat options futures.

Wheat Finance

Traders often use receivables finance and secured financing to grow their trade lines.

Receivables financing refers to an arrangement in which a company receives financing against receivables like unpaid invoices and other outstanding payments.

Video: CME Group – Chicago Wheat Futures 

If you’ve got five minutes to spare and you’re interested in finding out more about the production, use, and transportation of wheat, this video by the CME group does a great job of explaining it.

Wheat Suppliers and Producers

Wheat is grown all over the world, in many different countries, as different types of wheat are able to thrive in a diverse range of climates and soil conditions.

In the US, wheat is grown in 42 states, but the US is only the fourth largest producer of wheat. Their annual production of the crop is around 49.8 million metric tons. China produces more than double this amount, with an annual production of over 134.3 million metric tons.

The top 5 wheat-producing countries are:

1. China
2. India
3. Russia
4. USA
5. France

Wheat Contract Specifications

Wheat is typically priced in U.S. dollars (USD) per bushel or per metric ton, depending on the market. A bushel is a volume-based measurement used in the United States, equivalent to approximately 60 pounds or 27.216 kilograms of wheat. In the international market, wheat is commonly priced per metric ton (1,000 kilograms or 2,204.62 pounds).

The Harmonized System (HS) code for wheat is 1001. The HS code is an internationally standardised system of names and numbers to classify traded products. Wheat has several subcategories under the HS code 1001, such as:

• 1001.11: Durum wheat
• 1001.19: Other durum wheat
• 1001.91: Wheat and meslin seed for sowing
• 1001.99: Other wheat and meslin

Wheat is typically transported in bulk, either by truck, rail, or ship, depending on the distance and destination. For shorter distances, trucks are commonly used, while rail is preferred for longer distances within a country or across borders. For international trade, especially when covering long distances, ships are the primary mode of transportation, with wheat being loaded into large bulk carriers at ports.

Wheat futures contracts are traded on various commodity exchanges, such as the Chicago Board of Trade (CBOT) in the United States and the European Euronext exchange. These contracts help set the global benchmark prices for wheat and allow producers, traders, and consumers to manage price risk associated with the commodity.