Winter Wheat And Its Effects On Grain Prices

Winter wheat is a special crop used to bolster food production and improve agricultural conditions during less productive times of the year. In temperate climates with colder winters, the crop is usually planted throughout the fall and then harvested in the summer of the next year.

 

The strains of wheat used for this crop have higher levels of gluten and are useful in the manufacture of bread flour and heartier yeasted bread. Grains from this type of wheat are also blended with the grains of softer spring wheat to produce all-purpose flour.

Apart from food production, winter wheat is also useful as a cover crop. Cover crops prevent topsoil loss and soil erosion that occurs when fields are otherwise left to lie fallow over the colder months. Winter wheat can help better balance soil nutrient cycles and stifle weed growth. Winter wheat can also reduce irrigation demands since this crop capitalizes on spring and autumn rains.

The success of winter wheat crops has a big impact on grain prices and subsequently affects food manufacturing and the economy on the whole. Apart from the environmental factors that determine the productivity and price of winter wheat, geopolitical events can greatly contribute to grain price increases.

What Determines Wheat Prices?

One of the most critical factors that have affected historic wheat prices is rainfall. Lack of rain during seasons that are critical to winter wheat will reduce supply. Additionally, insufficient snowfall, which acts as an insulator for the crop, can subject seedlings to severe cold, which will reduce crop yield. In some cases, extreme weather that amounts to high winds and/or rain-saturated fields can cause harvesting delays.

 

In general, poor growing conditions that amount to reduced wheat output mean that winter wheat prices, and the cost of products like bread and flour, will rise, provided demand remains the same or increases.

These issues can also be applied to spring wheat prices, which have a great impact on products that require low-protein and less glutenous flour, like cake, pastry, and softer bread. Outside of environmental factors, the cost of agricultural operations impacts the price of wheat. Issues including labor or equipment shortages, rising costs of fertilizer and fuel sources, and access to usable land will tax wheat production and therefore increase prices.

Obstacles affecting global crop production and distribution, including political crises and national disasters in regions that grow wheat, amount to grain market volatility. Food production trends and demand for certain ingredients can also have an impact on wheat prices. Increased consumption of bread products will raise demand, but increased consumption of livestock that eat wheat-based animal feed will do the same.

How Much Is A Bushel Of Wheat?

Wheat is priced in units called bushels. Although other commodities are measured by the bushel, the weight/volume equivalent of a bushel varies by the commodity. In the case of wheat, a bushel is equivalent to 60 pounds, which amounts to enough flour to make 70 loaves of white bread or 90 loaves of whole wheat bread.

Over the last five years, the cost of a bushel of wheat has risen continuously, which followed a four-year period of decline. Notably, from the end of 2019 to the start of 2022, the price of wheat has nearly doubled due to factors that include severe and pervasive drought, rising fertilizer prices, labor gaps, demand fluctuations due to the Coronavirus pandemic, and more recently, the Russian invasion of Ukraine.

These factors have led to a combination of conditions that caused wheat prices to climb. Spring and winter wheat supplies have been strained and are expected to worsen food cost inflation. At the start of 2020, a bushel of wheat was priced at nearly $5.50. At the end of that year, the price per bushel rose to $6.40. Wheat prices in 2021 rose to a nine-year high of $8.56. Although prices dropped at the start of 2022, they are expected to hit a high of nearly $13.00.

Article Sources:

https://gro-intelligence.com
https://www.reuters.com
https://money.usnews.com
https://kswheat.com
https://www.macrotrends.net
https://www.cmegroup.com

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