Wheat is an important crop in the world because of the role
bread play’s in people’s lives. Around the world, billions of people eat wheat
in one way or another on a daily basis. Yet, wheat is unlike other plants like
corn and soybeans. This is because wheat is rarely grown on a small scale the
same way people farm corn. The biggest producers of wheat are China, Russia,
India, and United States respectively while the best source of wheat data is
the monthly World Agricultural Supply and Demand Estimates (WASDE) report published
by the Department of Agriculture. This month, the data was not released because
of the ongoing shutdown.
The price of wheat has continued to go up in recent years as
the world economy improves. This has made wheat products such as bread, cakes,
and pasta be affordable to more people, especially those from the emerging markets.
However, the price has been hampered by governments’ efforts to make the
product more affordable to the people.
This week, the price has soared mostly because of Russia,
the second biggest producer. Investors bought wheat futures on news that Russia
was thinking about increasing regulations in the industry. These regulations
are mostly about exports by the largest farms from the country. The rise was
also attributed to seasonally low supplies and the relatively strong rouble.
China too has been ramping up imports from Russia as well. In the European
Union, the supply too has been weak, with exports being 27% lower than where
they were a year ago,
The price of wheat has risen to the highest levels since
December last year. Yesterday, the price reached a high of $528. The price was
higher than the short and medium-term moving averages as the RSI rose to above
the overbought level. There is a likelihood that the price may continue to rise
as supply constraints rise.