Why Wheat is an Important Crop Around the World
Prices and Production Affect the Global Economy
Wheat crops grow around the world and have unique production cycles when it comes to planting and harvest seasons. Grain prices tend to fluctuate most during the wheat-growing season, as supply expectations can shift and change significantly due to the amount of planted acreage, weather, and growing conditions.
In the United States and China, there are two types of seasonal wheat crops: spring wheat and winter wheat. The seasonal timeframe for the planting and harvesting of wheat crops around the world in the main producing nations is as follows.
United States Seasonal Timeframe
- Planting: Planting of winter wheat occurs from mid-August through October
- Harvest: Harvesting of winter wheat occurs from mid-May to mid-July.
- Planting: Planting of spring wheat occurs from April through May
- Harvest: Harvesting of spring wheat occurs from mid-August to mid-September.
China Seasonal Timeframe
- Planting: Planting of winter wheat occurs from mid-September through October
- Harvest: Harvesting of winter wheat occurs from mid-May through June.
- Planting: Planting of spring wheat occurs from mid-March through April
- Harvest: Harvesting of spring wheat occurs from mid-July to mid-August.
Wheat as a Political Commodity
Wheat is perhaps the most political commodity in the world because it is the main ingredient in the most basic food, which is bread. While the United States is the world’s largest producer and exporter of corn and soybeans, wheat production comes from all corners of the earth.
China and the U.S. are major producers of wheat, but the European Union, India, Russia, Canada, Pakistan, Australia, Ukraine, and Kazakhstan are also important producers.
Each year the world requires more bread, and this increases global demand for wheat. That is the essence of its role as the most political commodity. Over the course of history, rising bread prices or the lack of availability have caused many incidents of civil insurrection.
The French Revolution, as well as other important revolutions and political changes, began because of bread shortages. The Arab Spring of 2010 started as a direct result of bread riots in Tunisia and Egypt, and it spread across the Middle East. Hungry people that depend on bread can cause dramatic changes in society and governments, and that is why wheat plays such an important role in the world.
Different Types of Wheat
There are many different types of wheat grown around the world. The protein content in wheat can vary, and certain strains of wheat are better for making bread while others are more appropriate for pasta, cakes, cookies, cereals and other dietary staples. Each year, the weather is the key determinate of wheat supplies.
In years where supplies exceed demand, inventories grow, and the price tends to drop lower. In years where crop output suffers due to adverse weather conditions, supplies can become scarce, and the price rises. Those high prices led to the Arab Spring uprisings.
Annual Fluctuations in Wheat Markets
Population growth has led the world to depend on bumper crops of wheat each year. While wheat can remain in storage for a while, it does not have an unlimited shelf life like other commodities such as metals, energy, and minerals. Over time, wheat and other agricultural staples deteriorate and rot. Wheat can lose protein content if held in storage for long periods.
Wheat is also sensitive to changes in the value of the U.S. dollar. As the U.S. is a major exporter of wheat to the world market, a higher dollar makes the grain more expensive around the world and decreases demand for U.S. grown wheat.
However, a lower dollar will often stimulate exports from the U.S. Wheat is the most important foodstuff traded on futures markets in the U.S. It all begins with planting season and by the time harvest comes around the world has a good idea if there will be enough to meet demand.