Wheat stockpiles are falling to their lowest levels for decades, pushing prices sky-high and creating potential trading opportunities, while food inflation is looking to challenge soaring energy costs as the biggest headache for world markets.
Soaring demand for wheat from developing nations and global droughts have meant that world wheat levels are at a 30-year low, and prices are riding high. Common Wheat prices in the US are up nearly 50% since August 2007, while Soybean futures prices jumped to $13.26 a bushel in Chicago trading from less than $7.50 a bushel last year.
Various factors affecting the price of wheat include:
- World wheat stockpiles at their lowest for 30 years, forcing prices up
- Increasing orders from foreign markets including South Korea, Taiwan, Mexico, Nigeria and Venezuela
- Spiralling oil prices
Risk protection on a range of commodities
So will wheat prices continue to spiral in response to global demand or are stocks likely to recover? IG Index offers spread bets on Chicago and London Wheat, Paris Milling Wheat and a range of other food commodities such as Soyabeans and Corn.
The volatility of these markets presents a unique opportunity for traders, with commodities often making sharp and sudden moves. For spread betters with IG Index, seeking to capitalise on these changes can be made safer with Guaranteed Risk Protection, which can guard against sudden losses.
Unlike conventional trading, spread betting allows you to profit from downward as well as upward trends depending on your predictions, while we also offer the ability to take smaller positions on commodities than are normally possible in underlying futures contracts.
For more information see our Dealing Handbook.
Updated: 21/02/08
The above comments do not constitute investment advice and IG Index accepts no responsibility for any use that may be made of them.