Compare Brokers For Trading Wheat

Looking for brokers for trading wheat? We have compared 12 broker accounts (out of 147) that are suitable for you below.

We found 12 broker accounts (out of 147) that are suitable for Wheat.

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Between 54-87% of retail CFD accounts lose money. Based on 69 brokers who display this data.

The Ultimate Guide to

Trading Wheat Futures Online

Wheat is a cereal crop, which grows as a grass, and its grain is used to make bread and pasta, amongst other things. It is a staple food around the world, and one of the most popular cereal grains.

737 million metric tons of it were produced worldwide in 2015/16. The largest producer was the European Union, with over 160 million metric tons. France, Germany and the UK were the biggest producers in the EU in the last decade (statista). Other large producers were China, and the US.

The different types of wheat include hard red spring, hard red winter, soft red winter, durum and white wheat. Each type of grain has its own primary use based on its qualities. Different regions are responsible for the different types, for example, the Great Plains near Kansas in the US are a prominent source of hard red winter wheat.

History Of Wheat

Archaeologists suggest that wheat was first cultivated in the southern Levant (Middle East), dating back as far as 8000 years. It rapidly became a staple food source across Europe, North Africa and West Asia .

During the Bronze Age in the British Isles, it was also used for roofing in the form of wheat straw, often referred to as thatch. This use was common right up until the late 19th century.

What Influences The Wheat Market?

Wheat is one of the largest and therefore most important agricultural commodities in the world. Because it is widely used within the food industry, there is the potential to use it to hedge against inflation. Below are a few examples of what can affect the prices.

  • Economy. The situation of the economy is one of the biggest factors in deciding the price. A weak economy will find the prices usually dip. As the economy strengthens so will the price of wheat.

  • Climate. As it is an agricultural commodity the weather hugely can determine the growth, quality and therefore price of wheat. Drought and cold weather will result in the price rising.

  • US Dollar Exchange. As US wheat futures are priced in dollars, the exchange rate of this currency plays an important role for foreign traders.

Wheat stockpiles have been diminishing recently with current data showing that in Europe the figures are at their lowest in the last 13 years with a 37% decrease. This is due to a combination of both poor harvest and strong consumption.

How is Wheat Traded?

Wheat futures are usually standardised, exchange-traded contracts where the trader agrees to take delivery of the stock from the seller at an agreed price on a future date. A futures deal is legally binding for a delivery of grain in the future at a price that has been agreed. The contracts are set at a standard by an exchange depending on quantity, quality, time and their place of delivery.

Wheat futures are usually used by industry participants as a form of risk management. This is known as hedging and it allows them to cover themselves against the crop fetching an insufficient price or a less than required amount being produced, for example.

Other futures traders are known as speculators, and they simply trade futures to speculate on the price movements in the hope of benefiting from the market moving in their favour.

Futures can be traded at the NYSE Euronext (Euronext) and at the Chicago Board of Trade (CBOT), where it is one of the most widely traded crops. CBOT futures are traded in lots of 5000 bushels (136 metric tonnes), and are priced per bushel in dollars and cents. Euronext Milling Wheat futures are traded in units of 50 tonnes and again prices are quoted in dollars and cents per bushel.

Wheat can also be traded with the CME Group, as Globex futures and Globex options (for electronic trading), or as Open Outcry options (for pit trading).

Trading Wheat as a CFD

Many online regulated brokers offer wheat trading as a contract for difference (CFD). These include IG and Plus500. The CFDs offered by Plus500 are based on the Chicago Wheat futures contract from CME Group. A minimum of 10,000 bushels is required to be traded on a Plus500 trade, so with leverage at 1:152. a spread of 0.87, and an initial margin on 0.66%, the minimum margin required to open a long position at a price of 403.93 would be around £207 (price taken from Plus500 trading platform – 30/08/2017). IG offer wheat CFDs on Chicago Wheat, London Wheat and Paris Milling Wheat.

Plus500 Wheat CFD

Plus500 Wheat CFD

Conclusion

Wheat is a popular commodity, and with a CFD, traders can gain significant exposure to the market with a low margin requirement. This is because they are offered on leverage. However, this also exposes the trader to the risk of significant losses to their capital, and this should be noted when taking a position on any financial instrument. Choosing a regulated broker from a country that is known for stringent regulatory standards is useful for providing reassurance that the broker is acting in the best interests of their clients.

Between 54-87% of retail CFD accounts lose money. Based on 69 brokers who display this data.