3 Useful Facts that First-Time Wheat Producers Must Know When Trading in the Global Market

Posted on: 20 September 2017

Just like rice and maize, wheat is a staple food for many people across the globe. An augmentation of the global customer base is increasing the demand for the wheat product. However, wheat prices have shown unprecedented levels of volatility both nationally and internationally owing to factors such as world supply, demand, and global weather patterns. Here are some useful facts that first-time wheat producers should know when trading in the global marketplace.

The Effects of Weather on Wheat Production -- Wheat-planting regions in Australia have experienced low average rainfall in recent times. The outcome of the shortage is adverse planting conditions that lead to the reduced acreage of wheat and low yields. The weather pattern is not only unfavorable in Australia, but also in other parts of the world. With a decrease in global production, wheat producers are forced to ration the produce in the face of growing demand, which causes spikes in wheat prices. Therefore, as a producer, you can opt to plan production around weather patterns and influence your returns.

Wheat Quality -- Wheat producers need to focus on superior quality grains to increase profitability. Research is one way of improving wheat quality and ensures competitive advantage in the global arena. First-time producers must continue to improve their yields by adopting wheat varieties that are resilient to the effects of climate change and diseases. Farmers should know that all the varieties grown in Australia are classified according to the quality of the harvest and the type of processing. Examples of wheat segregations (based on the protein level) include Australian Hard 1, Hard 2, Premium White 1, and Standard white. These categories of wheat fetch higher prices in the market, and thus, put more money in the pockets of wheat producers.

Currency Exchange Rates --The international trade of wheat is affected by demand and supply, which is in turn affected by the global currency exchange rates. For example, Australia not only produces wheat for the domestic market, but also for the world market. Therefore, as a first-time wheat producer, you need to know that since Australia uses a different currency compared to other countries, then international market prices will be pegged to the US dollar. If a wheat farmer understands the effects of currency exchange rates, they can respond accordingly to boost profitability. For example, a wheat farmer can opt to sell when the Aussie is stronger compared to US Dollar to make more money. 

For more information, contact companies like Grainpro Australia Pty Ltd.