- Wheat is one of the
world's three most important cereal crops along with maize and rice.
It is reported to be grown domestically from atleast as early as 9000
BC and is now grown in almost all parts of the world.
- Wheat is a globally
important source of dietary carbohydrate (starch) and protein
(gluten). Its grain is a staple food used to make flour for leavened,
flat and steamed breads, biscuits, cookies, cakes, breakfast cereal,
pasta, noodles etc and for fermentation to make beer, alcohol, vodka,
or biofuel. It is also used for feeding animals to a limited extent.
- Different varieties
of wheat are grown across the world. The three principal types of
wheat used in modern food production are: Triticum vulgare (soft wheat),
Triticum durum (hard wheat) and Triticum compactum
- The annual global
wheat production has been in the range of 600-630 tonnes in the recent
years. However, in 2008-09 it is estimated to have risen sharply to 689
million tonnes. The combined production of all cereals in 2008-09 is
estimated to be 2525 million tonnes.
- EU-27, China, India,
USA and Russia are the five major producers of wheat accounting for
close to 70% of the total global production, with 2008-09 production
in these regions being 151, 112.5, 78.6, 68 and 63.8 million tonnes
- Wheat is the most
important cereal traded in the world market. The global trade in wheat
during 2008-09 was sharply up at around 140 million tonnes in 2008-09
from an average of around 110 - 115 million tonnes in the recent
- While US (25 - 35
million tonnes), EU-27 (15-25 million tonnes), Canada (15-20 million
tonnes), Australia (8-18 million tonnes) and Argentina (6 - 12 million
tonnes) are major exporters, there are a large number of countries
importing wheat with maximum demand emanating from developing nations.
The major importing regions are Middle-east Asia, South-east Asia and
North-west Africa. Egypt, Brazil, Indonesia, Algeria are the most important
- Wheat crops around
the world have their own unique production cycles of planting and
Important World Wheat Markets
exchanges - Chicago Mercantile Exchange, which acquired Chicago Board
of Trade, Kansas City Board of Trade, Zhenghzhou Commodity Exchange,
South African Futures Exchange, MCX, NCDEX
- US FOB and EU
(France) FOB prices determine the physical prices
- India has the
largest area in the world under wheat cultivation. However, due to low
productivity it is only the third largest producer after EU-27 and
- India's annual
production of wheat has been around 75-79 million tonnes from 2006-07,
with production in 2008-09 estimated to be around 78.6 million tonnes.
Wheat accounts for around 30-35% of India's total foodgrain production
of around 220 million tonnes. India's annual wheat consumption is
estimated to be around 72 million tonnes currently.
- Green revolution and
increased focus by Government on wheat has helped wheat production to
surge sharply from around 6 million tonnes at time of independence to
current levels. Close to 90% of the area under wheat is irrigated,
which too has supported the rise in output over the years.
- Uttar Pradesh (34%),
Punjab (20%), Haryana (13%), Rajasthan (10%) and Madhya Pradesh (10%)
are the main wheat producing states of India.
- Wheat is cultivated
as a rabi crop in India, with sowing being undertaken from October to
December and harvesting from March to May. The official marketing
season of wheat in India is assumed to commence from April.
- Government plays a
major role in the wheat value chain in India as the cereal is very
important for the country's food security. The Central Govt. sets the
Minimum Support Price (MSP) every year, which sets the mood for the
upcoming season. As govt. agencies have been recently procuring close
to 25-30% of annual production, open market prices too do not
generally fall below this price. Historically, the procurement has
been around 15-20%.
- The procured wheat
is used to maintain a minimum buffer stock for meeting unforeseen
exigencies, for providing foodgrains required for Public Distribution
System (PDS) and the other foodgrain based welfare programmes of the
Government. In addition, the grain is also sold at pre-determined
prices to the open market.
- Though, India is not
a major player in global markets India has resorted to imports,
whenever there is a supply tightness. India has also exported around 5
million tonnes of wheat in 2003-04. Govt. agencies take the decision
to bring in imports and the current policies are not in favour of
Market Influencing Factors
- Wheat is an annual,
seasonal crop and prices usually tend to rise during the cultivation
period, i.e. December to March due to scarcity in the market and dip
during the peak arrival period (April and May).
- Weather has a
profound influence on production, especially in Haryana and Punjab as
temperature plays a crucial role in determining the yield.
- The Govt. policies
with regard to MSP, buffer stocks, PDS sales, Open Market Sales,
imports / exports are very important influencing factor with regards
to Indian wheat prices.
international trade being limited, the several variations in
production or consumption at various major or minor producing or
consuming country, which influence global prices, are reflected in the
domestic long-term price trend. However, in the short-term normally there
is no significant relation with international prices.
international agencies like US Dept. of Agriculture, International
Grains Council, Food and Agricultural Organisation release regular,
periodic reports on global supply-demand situation, which is widely
looked upon by the global players.