One can be forgiven for assuming wheat is mostly consumed by humans since it is an integral ingredient in several staple foods like bread, pasta, noodles, pancakes, porridge, biscuits, crackers, cookies, cakes, beer, vodka and the list goes on. Fact of the matter is, the usage of wheat as food component only represent 58% of its global demand. The rest is used in the creation of biofuels and other derivatives for various industries.

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Based on archeological findings, wheat was first cultivated in Southern Levant, Western Asia during the 9600 BCE. Further analysis of wild einkorn wheat specified the Karacadag Mountains in Southeastern Turkey as the place where it was first grown.

From Asia, it spread across the world via Europe where other uses for the crop such as for roofing purposes during the Bronze Age, was also invented.

Today, wheat is grown on more than 540,000,000 acres of land around the world with the whole of Europe, China, India, Canada and the United States being the biggest producers.

Wheat commodity
Wheat commodity

Investment Info of Wheat

Contract Ticker Symbol: W
Underlying Commodity: Premium Wheat
Electronic Ticker: ZW
Contract Size: 5000 Bushels
Price Valuation: $0.0025/bushel ($12.50 per contract)
Trading Months: March, May, July, September and December

What is a bushel?
A bushel is a US customary and imperial unit of volume based from an earlier method of measurement of dry state. In US measurement, one bushel is equal to 64 pints or 35.2 liters for dry goods. In British measurement, one bushel is equal to 8 imperial gallons or 36.4 liters.

Wheat Price Indicators

Like other commodities, there are several factors that may affect the price of this agricultural commodity. Here are the main ones:

  • The supply of and the demand for wheat
  • The weather conditions in the large-producing regions
  • Government regulations, tariffs, taxes and import and export fees that may be implemented
  • The over-all stock of wheat as compared to its current supply and production numbers
  • Lastly, the change in world population since any increase will also drive the demand up

Pros of Investing in Agricultural Commodities

Like soybeans and corn, wheat is considered as an agricultural commodity that remains integral to global food production, thus causing wide appeal in the commodities market for investors to trade for them.

Here are a few takeaways on why agricultural commodities continue to be an attractive investment choice:

  • Agricultural commodities has performed stronger than the broader market over the last several years.
  • ETFs that recorded the best one-year trailing total yield are CORN, SOYB and RJA.
  • The top holdings of these ETFs mentioned are futures contracts for wheat, soybean and corn.

Ways of Investing on Wheat

Investors always look at commodities as an appealing investment option despite the volatility it brings.

Betting on the future price of a leading agricultural commodity like wheat may come with its own share of risks. Nevertheless, it also provides a greater chance of achieving high yields.

Simply say, if the supply of a commodity goes down while demand drives up, you as the investor wins. If the opposite happens, then it could mean suffering some losses.

Here are the different ways on how you can invest on wheat:

  • ETFs: There are two vital ETFs that provides investors exposure to wheat. These are the iPath Dow Jones-UBS Grains Sub-Index Total Return ETF, the Teucrium Wheat Fund and the ELEMENTS Exchange Traded Notes MLCX Grains Index-Total Return. Remember that Exchange-traded Funds (ETFs) trade as shares on exchanges in a similar manner as stocks do.

  • Futures: This investment model maximizes leverage, so it is important to be quite familiar on the effect of leverage on futures contracts. Applying leverage means borrowing funds to strengthen gains. A futures contract of wheat can be traded with a margin deposit of 5% to 10% of the contract's value. This allows the profits or losses from any futures contracts to be of 10-20 times the value of the price change.

  • Options: Options are options contracts where the underlying asset is a futures contract.

  • Stocks: This involves investing directly on companies involved in wheat production and distribution.

  • CFD (Contracts for Difference): Quickly becoming an investor’s go-to investment method, contracts for difference or CFD trading is making trading for stocks and commodities an easier undertaking. Thanks to social trading apps like eToro, investors nowadays can naturally speculate on the price of stocks and commodities alike.

    Take note that the price of the CFD is the difference between the price of the asset at the time of the purchase and its present value.
Wheat CFD trading page on eToro
Wheat CFD trading page on eToro

How to Start CFD Trading of Wheat?

Engaging in CFD trading has never been easier than today. All you need to do choose a reliable broker or sign up on a CFD trading platform such as eToro to open an account and deposit your fund.

Investing on this commodity via the eToro's CFD trading platform doesn't require any storage fees since you won't be trading any physical assets.

How to Trade Wheat on eToro?

  1. Create an account on eToro / Log-in your account for existing users.
    eToro web-based platform
    eToro web-based platform
  2. Click "Discover".
    Clicking "Discover" on eToro
    Clicking "Discover" on eToro
  3. Select "Commodities".
    Selecting Commodities on eToro's platform
    Selecting Commodities on eToro's platform
  4. Choose “WHEAT”.
    Looking for WHEAT on eToro's list of commodities
    Looking for WHEAT on eToro's list of commodities
  5. Select BUY or SELL.
    Buying or selling WHEAT in eToro
    Buying or selling WHEAT in eToro
  6. Key in your desired amount to invest or the number of wheat units you want to trade.
    Entering amount to invest on WHEAT via eToro
    Entering amount to invest on WHEAT via eToro
  7. Review and set the stop loss, leverage, and take profit parameters.
    Reviewing stop-loss, leverage and take profit on WHEAT CFD trade
    Reviewing stop-loss, leverage and take profit on WHEAT CFD trade
  8. Select “Open Trade”.
    Executing WHEAT buy order on eToro
    Executing WHEAT buy order on eToro

Thinking of trading wheat with eToro?

eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.

Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Past performance is not an indication of future results. Trading history presented is less than 5 complete years and may not suffice as basis for investment decision.

Copy trading is a portfolio management service, provided by eToro (Europe) Ltd., which is authorised and regulated by the Cyprus Securities and Exchange Commission.

Cryptoasset investing is unregulated in some EU countries and the UK. No consumer protection. Your capital is at risk.

eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro.

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