Wheat Dec '21 (ZWZ21)
|Contract||Chicago Soft Red Winter Wheat|
|Tick Size||1/4 cent per bushel ($12.50 per contract)|
|Daily Limit||65 cents per bushel ($3,250 per contract) Expanded limit 100 cents|
|Contract Size||5,000 bushels|
|Months||Mar, May, Jul, Sep, Dec (H, K, N, U, Z)|
|Trading Hours||7:00p.m. - 7:45a.m. and 8:30a.m. - 1:20p.m. (Settles 1:15p.m.) (Sun-Fri) CST|
|Value of One Futures Unit||$50|
|Value of One Options Unit||$50|
|Last Trading Day||The business day prior to the 15th calendar day of the contract month|
Wheat is a cereal grass. Wheat was a wild grass before humans started to cultivate it for larger-scale food production. It has been grown in temperate regions and cultivated for food since prehistoric times. Wheat is believed to have originated in southwestern Asia. Archeological research indicates that wheat was grown as a crop in the Nile Valley about 5,000 BC. Wheat is not native to the U.S. and was first grown here in 1602 near the Massachusetts coast. The common types of wheat grown in the U.S. are spring and winter wheat. Wheat planted in the spring for summer or autumn harvest is mostly red wheat. Wheat planted in the fall or winter for spring harvest is mostly white wheat. Winter wheat accounts for nearly three-fourths of total U.S. production. Wheat is used mainly for human consumption and supplies about 20% of the food calories for the world's population. The primary use for wheat is flour, but it is also used for brewing and distilling, and for making oil, gluten, straw for livestock bedding, livestock feed, hay or silage, newsprint, and other products.
Wheat futures and options are traded at the CME Group, the Mercado a Termino de Buenos Aires (MAT), Sydney Futures Exchange (SFE), London International Financial Futures and Options Exchange (LIFFE), Marche a Terme International de France (MATIF), Budapest Commodity Exchange (BCE), the Kansas City Board of Trade (KCBT), and the Minneapolis Grain Exchange (MGE). The CME's wheat futures contract calls for the delivery of soft red wheat (No. 1 and 2), hard red winter wheat (No. 1 and 2), dark northern spring wheat (No. 1 and 2), No.1 northern spring at 3 cents/bushel premium, or No. 2 northern spring at par.
Prices - CME wheat futures prices (Barchart.com electronic symbol ZW) rallied to a 7-1/2 year high of $6.93 per bushel in January 2021. Expectations of stronger foreign demand for U.S. wheat boosted prices after Russia, the world's largest wheat exporter, nearly doubled taxes on its wheat exports in an attempt to cool domestic food inflation. Wheat prices then traded sideways to lower and dropped to a 1-year low of $5.9325 per bushel in March. The outlook for higher U.S. wheat production undercut prices after the USDA, in its 2021 planting intentions report, projected U.S. farmers would plant 46.4 million acres of wheat, up +4.7% yr/yr and above expectations of 44.9 million acres. In May, prices recovered and jumped to a 9-year high of $7.7350 per bushel. A surge in corn and soybean prices to 9-year highs in May sparked increased global demand for wheat for animal feed. After trading sideways into July after the USDA raised its U.S. 2021 wheat acreage estimate to 46.7 million acres from 46.4 million, wheat prices trended higher into November and posted a new 9-year high of $8.6325 per bushel. Wheat prices soared on surging global wheat demand that shrank wheat stockpiles. The International Grains Council cut its 2021/22 global wheat stockpile estimate in November to 274 million metric tons from 276 million metric tons in October and said wheat inventories in major exporting countries had fallen to a 9-year low. Global wheat supplies were stretched after bad weather struck the harvests of major producers. A La Nina weather pattern emerged in Q4-2021 in the southern hemisphere that brought untimely rain to Australia, the world's fourth-largest wheat exporter, which undercut wheat yields. Wheat prices fell back into year-end after the USDA, in the December WASDE report, raised its 2021/22 U.S. and global wheat ending stocks above estimates and cut back its forecast for U.S wheat exports. Wheat prices finished 2021 up +20.3% yr/yr at $7.7075 per bushel.
Supply - World wheat production in the 2021/22 marketing year is forecasted to rise +0.4% yr/yr to 778.600 million metric tons, a new record high The world's largest wheat producers in 2021/22 are expected to be the European Union with 17.8% of world production, China with 17.6%, India with 14.1%, Russia with 9.7%, and the U.S. with 5.8%. China's wheat production in 2021/22 is expected to rise +2.0% yr/yr to a record 136.946 million metric tons. India's wheat production in 2021/22 is expected to rise by +1.5% yr/yr to a record high of 109.52 million metric tons. The world land area harvested with wheat in 2021/22 is expected to rise +1.1% yr/yr to a record 223.4 million hectares (1 hectare equals 10,000 square meters or 2.471 acres). The world wheat yield in 2021/22 is expected to fall by -0.6% yr/yr to 3.49 million metric tons, down from the 2019/29 record high of 3.54 million metric tons.
U.S. wheat production in 2021/22 is expected to fall by -10.0% yr/yr to 1.646 billion bushels, which would be the smallest wheat crop since 2002/03. The U.S. winter wheat crop in 2021 rose +9.0% yr/yr to 1.277 billion bushels, which was well below the record winter wheat crop of 2.097 billion bushels seen in 1981. U.S. production of durum wheat in 2021 fell by -46.1% yr/yr to 37.259 million bushels, the smallest crop since 1961. U.S. production of other spring wheat in 2021 fell by -43.6% yr/yr to 331.140 million bushels, the smallest crop since 1988. The largest U.S. producing states of winter wheat in 2021 were Kansas with 28.5% of U.S. production, Oklahoma with 9.0%, Texas with 5.8%, Washington with 5.6%, and Montana with 4.2%. U.S. farmers planted 46.703 million acres of wheat in 2021, up +5.1% yr/yr. The U.S. wheat yield in 2021/22 is expected to be down by -10.9% yr/yr at 44.3 bushels per acre, the lowest since 2015/16.
Demand - World wheat utilization in 2021/22 is forecasted to rise +0.6% yr/yr to 787.5 million metric tons, a new record high. U.S. consumption of wheat in 2021/22 is expected to rise +1.6% yr/yr to 1.138 billion bushels, which would be below the 2012/13 record high of 1.389 billion bushels. The wheat usage breakdown in 2021/22 is expected to be 84.5% for food, 9.7% for feed and residuals, and 5.8% for seed.
Trade - World trade in wheat in 2021/22 is expected to rise by +0.9% yr/yr to a record 204.4 million metric tons. U.S. exports of wheat in 2021/22 are expected to fall by -16.8% yr/yr to 825.0 million bushels, the lowest since 2015/16. U.S. imports of wheat in 2021/22 are expected to fall -0.2% yr/yr to 100.0 million bushels, the lowest level since 2010/11.
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