Wheat - Commercial Use

Commercial Use

Harvested wheat grain that enters trade is classified according to grain properties for the purposes of the commodities market. Wheat buyers use these to decide which wheat to buy, as each class has special uses, and producers use them to decide which classes of wheat will be most profitable to cultivate.

Wheat is widely cultivated as a cash crop because it produces a good yield per unit area, grows well in a temperate climate even with a moderately short growing season, and yields a versatile, high-quality flour that is widely used in baking. Most breads are made with wheat flour, including many breads named for the other grains they contain like most rye and oat breads. The popularity of foods made from wheat flour creates a large demand for the grain, even in economies with significant food surpluses.

In recent years, low international wheat prices have often encouraged farmers in the USA to change to more profitable crops. In 1998, the price at harvest was $2.68 per bushel. A USDA report revealed that in 1998, average operating costs were $1.43 per bushel and total costs were $3.97 per bushel. In that study, farm wheat yields averaged 41.7 bushels per acre (2.2435 metric ton / hectare), and typical total wheat production value was $31,900 per farm, with total farm production value (including other crops) of $173,681 per farm, plus $17,402 in government payments. There were significant profitability differences between low- and high-cost farms, mainly due to crop yield differences, location, and farm size.

In 2007 there was a dramatic rise in the price of wheat due to freezes and flooding in the northern hemisphere and a drought in Australia. Wheat futures in September, 2007 for December and March delivery had risen above $9.00 a bushel, prices never seen before. There were complaints in Italy about the high price of pasta. This followed a wider trend of escalating food prices around the globe, driven in part by climatic conditions such as drought in Australia, the diversion of arable land to other uses (such as producing government-subsidised bio-oil crops), and later by some food-producing nations placing bans or restrictions on exports in order to satisfy their own consumers.

Other drivers affecting wheat prices include the movement to bio fuels and rising incomes in developing countries, which is causing a shift in eating patterns from predominantly rice to more meat based diets (a rise in meat production equals a rise in grain consumption—seven kilograms of grain is required to produce one kilogram of beef).