Bellwether (noun) definition: something that leads or indicates a trend. Example: “The wheat market is now a bellwether for the war in Ukraine.”
In several recent reports, it has been suggested that the wheat market could take the lead and be the primary driver of all grain and oilseed markets. This is a bold suggestion for a crop that, since 1980, has lost nearly half of its planted acres to corn and soybeans. It’s a bold suggestion because, unlike corn, there has been no ethanol boom that has transformed the demand side of the market. And, unlike soybeans, there has been no booming demand source like China, or looming demand source like renewable diesel.
Nope. Wheat is just wheat, with demand driven by - but lagging behind - population growth. In year 2000, USDA estimated total U.S. food use of wheat at 950 million bushels. By 2020, the U.S. population had grown 18%, while wheat for food grew by 1%, to 960 million bushels. Demand growth may be slow, but wheat remains one of the two most important basic food crops in the world. It is of particular importance to poor nations in North Africa.
Wheat is now the bellwether for the war in Ukraine. At the start of the conflict, wheat prices soared as serious questions developed regarding the ability of Ukrainian producers to get a crop planted. (And, is “soar” a strong enough adjective to describe a Chicago wheat market where prices increased from about $8 to a high over $13.60/bushel in 8 trading days?) Ukrainian crop concerns remain, but the market was able to calm down with a stout show of strength by the Ukrainian army and people.
No one knows how long the Russian/Ukrainian conflict will last, but it reminds us of the importance of wheat as a food crop!
Editor’s Take:
As the article aptly suggests, wheat is a staple, especially in poor developing countries. It is also the base for many processed foods right here in the U.S. A shortage of wheat could spell disaster. But wait – if there is one thing farmers around the globe, and especially in America, respond to – it’s higher prices. Farmers are pretty savvy about calculating the best and highest use for their land. As wheat prices and yields start to compete with the profitability of crops like corn or soybeans, farmers will make the shift. And, there is simply some land that the only feasible crop is wheat. So, there is no need to let panic take over just yet!
