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).
Production and consumption
In 2003, global per capita wheat consumption was 67 kg, with the highest per capita consumption (239 kg) found in Kyrgyzstan.
In 1997, global wheat consumption was 101 kg per capita, with the highest consumption (623 kg per capita) in Denmark, but most of this (81%) was for animal feed.
Wheat is the primary food staple in North Africa and the Middle East, and is growing in popularity in Asia. Unlike rice, wheat production is more widespread globally though China’s share is almost one-sixth of the world.
In the 20th century, global wheat output expanded by about 5-fold, but until about 1955 most of this reflected increases in wheat crop area, with lesser (about 20%) increases in crop yields per unit area. After 1955 however, there was a dramatic ten-fold increase in the rate of wheat yield improvement per year, and this became the major factor allowing global wheat production to increase. Thus technological innovation and scientific crop management with synthetic nitrogen fertilizer, irrigation and wheat breeding were the main drivers of wheat output growth in the second half of the century. There were some significant decreases in wheat crop area, for instance in North America.
Better seed storage and germination ability (and hence a smaller requirement to retain harvested crop for next year’s seed) is another 20th century technological innovation. In Medieval England, farmers saved one-quarter of their wheat harvest as seed for the next crop, leaving only three-quarters for food and feed consumption. By 1999, the global average seed use of wheat was about 6% of output.
Several factors are currently slowing the rate of global expansion of wheat production: population growth rates are falling while wheat yields continue to rise, and the better economic profitability of other crops such as soybeans and maize, linked with investment in modern genetic technologies, has promoted shifts to other crops
