The price of wheat is still high. How much longer will it last?

Wheat has been one of the most closely watched commodities since the outbreak of the war in Ukraine, when its price climbed to 14-year highs in a relatively short period.* Another significant factor that pushed its price up was India's announcement in mid-May this year that it would suspend exports of the grain. Despite a slight decline in recent weeks, the price of the commodity continues to hold high.

Wheat has been one of the most closely watched commodities since the outbreak of the war in Ukraine, when its price climbed to 14-year highs in a relatively short period.* Another significant factor that pushed its price up was India's announcement in mid-May this year that it would suspend exports of the grain. Despite a slight decline in recent weeks, the price of the commodity continues to hold high.

 

Generally speaking, global prices of major cereals are quite sensitive to any news from major producers, weather fluctuations, increases in the cost of cultivation, etc. The price of wheat has risen significantly this year, mainly due to falling world stocks and reduced exports from Ukraine, which has been in a state of war since the end of February. According to available data, up to 25 per cent of global wheat exports are expected to come from the warring countries of Ukraine and Russia. The Russian attack on Ukraine and its related consequences have thus caused a global shortage of this commodity and concerns about the security of food supplies (of which wheat is a part) in developing countries.

 

India stopped exports

 

After India banned commodity exports from the country a month ago, when its harvest was hit by a heat wave, the price of wheat reached new highs. Following the opening of the market in Europe, it rose to EUR 435 per tonne. It was pushed up by negative investor sentiment, which had relied on India, the world's second-largest wheat producer, after Ukraine blocked exports. Since then, the price of the commodity has fallen slightly, but still remains relatively high. According to Businessinsider.com, the price reached EUR 397 per tonne on Thursday.

 

wonderpsenice

Graph: Wheat price development over the last years. (Source: businessinsider.com)

 

Developing countries also face problems

 

According to information published in a recent report by the Food and Agriculture Organization of the United Nations (FAO), some countries in West Africa have seen new record high cereal prices, mainly due to rising demand and lower cross-border flows of commodities. Prices of various products, including wheat flour, are also rising in the coastal countries of the African continent, where conflicts persist, and the local economies are struggling with weakening currencies. These include Sudan, South Sudan, countries in the Far East and Sri Lanka.

 

Rice as an alternative to wheat

 

The scarcity of the commodity and the sharp rise in its price are forcing countries to search for alternatives to use in place of wheat.  Japan's food industry is now concentrating on making flour from rice, which is plentiful in Japan, does not need to be imported and is not as susceptible to price fluctuations.

 

Price pressure persists

 

As the factors that have been pushing up the price of wheat continue to persist, it is likely that the price of this commodity will not start to fall so quickly. It will be quite the opposite. Given rising inflation, the input costs of cultivation, harvest concerns due to the heatwave, and the ongoing supply problem due to the conflict in Ukraine, it is likely that price pressures will intensify in the near future.[1]

 

 

* Past performance is no guarantee of future results.

 

                                              

[1] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or on the current economic environment, which may change. Such statements are not guarantees of future performance. They involve risks and other uncertainties that are difficult to predict. Results may differ materially from those expressed or implied by any forward-looking statements.

This text constitutes marketing communication. It is not any form of investment advice or investment research or an offer for any transactions in financial instrument. Its content does not take into consideration individual circumstances of the readers, their experience or financial situation. The past performance is not a guarantee or prediction of future results.

🍪 Cookies

We use cookies to store, access and process personal data to give you the best online experience. By clicking Accept Cookies you consent to storing all cookies and ensure best website performance. You can modify cookie preferences or withdraw consent by clicking Cookie Settings. To find out more about cookies and purposes, read our Cookie Policy and Privacy Notice.

Cookies settings


Cookie Control

What are cookies?

Cookies are small text files that enable us, and our service provides to uniquely identify your browser or device. Cookies normally work by assigning a unique number to your device and are stored on your browser by the websites that you visit as well as third-party service providers for those website. By the term cookies other technologies as SDKs, pixels and local storage are to be considered.


If Enabled

We may recognize you as a customer which enables customized services, content and advertising, services effectiveness and device recognition for enhanced security
We may improve your experience based on your previous session
We can keep track of your preferences and personalize services
We can improve the performance of Website.


If Disabled

We won't be able to remember your previous sessions, that won't allow us to tailor the website according to your preferences
Some features might not be available and user experience reduced without cookies


Strictly necessary means that essential functions of the Website can not be provided without using them. Because these cookies are essential for the properly working and secure of Website features and services, you cannot opt-out of using these technologies. You can still block them within your browser, but it might cause the disfunction of basic website features.

  • Setting privacy preferences
  • Secure log in
  • Secure connection during the usage of services
  • Filling forms

Analytics and performance tracking technologies to analyze how you use the Website.

  • Most viewed pages
  • Interaction with content
  • Error analysis
  • Testing and Measuring various design effectivity

The Website may use third-party advertising and marketing technologies.

  • Promote our services on other platforms and websites
  • Measure the effectiveness of our campaigns

Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 92.59% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.