Page 40 - MEX-Yearbook-2017
P. 40
Commodity Insights
Wheat
Introduction harvested in a relatively short space of time. While such a ready supply
Wheat, while coming second to maize in total production as a cereal crop, is may not always track with demand in commodities without such worldwide
in fact the most important food grain in the world, and therefore an essential appeal, in the case of wheat this works to its advantage as the demand for
component of the world’s commodity trading network. It is the staple food wheat is believed to be increasing to even higher levels. Wheat commodities
of millions of people all across the world, and has been ever since people can thus be guaranteed to have a buyer somewhere, a fact of which every
developed advanced agricultural techniques thousands of years ago. trader in the wheat futures market will be acutely aware.
It is believed that wheat may have been harvested for at least 12000 years,
so its pedigree as a food item cannot be underestimated. The crop itself is Fundamental Facts
thought to have evolved from a type of wild grass native to the arid terrain • Wheat prices depend on the balance of U.S. and world wheat supply and
of Asia Minor, although as it can flourish in many different climates it is
not limited to that region. There are more varieties of wheat than any other demand, with changing stock levels having important price implications.
cereal crops and these generally fall into two categories – winter wheat and • Wheat, corn, and soybean prices tend to move together, as they can be
spring wheat – depending in which season they were harvested.
The most special feature of the wheat commodity must surely be its substitutes and compliments both on the production and use side.
worldwide prominence as a foodstuff. In terms of production, it sits between • There are numerous uncertainties that make it difficult to anticipate how
maize and rice as the second most produced food grain in the world, and
yet despite these massive yields of it as a crop, the market never becomes much wheat prices will move in the future
saturated. The wheat market benefits from the fact that wheat can thrive in • Widespread weather problems, heavy rainfall, drought, hot dry weather
many different climates making production relatively easy, and it can be
conditions etc. affects the production.
• Impact of U.S Dollar depreciation on wheat prices
• Policy changes (export ban or quotas)
39 | MEX NEPAL YEAR BOOK 2017
