Trading Wheat: Factors in Wheat Price
The wheat price is a complex interplay of various factors that are constantly changing and interacting. One of the most important factors is the weather. Extreme conditions such as drought, flooding or frost can significantly affect crop yields and thus also the price of wheat. In 2022, for example, there was a drought in many parts of the USA, the so-called southern plains. Wheat was seriously threatened by a lack of rainfall in the growing regions of Kansas, Oklahoma and Texas. This led to rising prices when buying wheat. But the general weather conditions during the growing and harvesting season also play a crucial role.
In addition, global trade policies have a significant impact on the price of wheat. Tariffs, trade agreements and political tensions can affect demand and supply in international markets. For example, Russia and Ukraine are together for more than a quarter of world wheat exports responsible and thus the decisive wheat producers for the world market. As a result of the Russian war of aggression in Ukraine, the price of wheat and fertilizer rose significantly in 2022. If there were delivery bottlenecks or failures in both countries, that would have enormous impact on the world agricultural markets and thus the wheat trade. Crop yields in other wheat-producing countries and global demand for wheat can also affect the price.