Wheat futures for July delivery perked up a bit today after slumping yesterday to a four-year low of $4.26 a bushel.
The low prices yesterday were partially the result of the summer harvest beginning on the Great Plains, swelling stocks of grain and potentially leading to fears of excess supply.
Today, however, the U.S. Department of Agriculture indicated that winter-wheat production will decrease to its lowest levels in four years, mostly due to heavy rains impeding planting during last fall. Wheat futures rose to around $4.34 a bushel in trading today.
As with most other agricultural commodities, weather conditions in the most productive regions can have a major impact on the price of wheat futures.
Another important input is the price of oil, which is extremely critical to energy-intensive industrial agriculture, both as fuel and in the production of fertilizer. Oil futures are up as well today.
Making up some of the shortfalls in U.S. production were Russia and the Ukraine, which had ample harvests.
As the world’s largest wheat exporter, however, the U.S. has an outsize impact on the market. It lags behind India and China in total production, but those two countries consume a far greater proportion of the wheat they grow.
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