Wheat, which is grown all over the world, is a grain that has always topped the interest of investors, as it is one of the most important ingredients in food. Trade in wheat in AvaTrade CFDs allow traders to participate in the agricultural markets without having to trade actual tons of wheat.
wheat trading markets
wheat trade It can take place on several exchanges, however, there are two major exchanges included in wheat futures: the Chicago Board of Trade (CBOT) and the New York Stock Exchange Euronext (Euronext). Wheat futures prices are displayed in US dollars and cents (USD) per bushel.
Wheat trading hours and other trading information
• wheat trading times:01:00-13:44 and 14:30-19:14 (GMT)
• Minimum Trade Size: 1
• Contract size: 100 bushels
• Tickersymboler: Open Out cry W (under CBOT) Code: ZW
• MT4- Token: wheat
• Price information: cents per bushel
• tick size: 0.25 percent per bushel
Wheat is a dominant food base and has the ability to withstand harsh climates. Another advantage of wheat production is that the grain can be harvested in a fairly short time, and there is such a clear presentation of wheat, even if it is second only to cornIt is an essential part of the global trade network in agricultural commodities. These factors contribute to the increased demand for the product when wheat is traded.
What affects the price of wheat?
As with all commodities, several factors influence the grain market. Above all, weather plays one of the biggest roles in wheat harvest. Although wheat is a strong grain, severe droughts or floods will adversely affect the supply of wheat, which is suitable for increasing the harvest/production of all wheat products, thus increasing the market price.
Most wheat futures charts show an upward trend in the demand for the product; However, factors like change in government import policy may affect wheat trade and thus wheat trade price. New agricultural techniques can also affect the commercial price of wheat as production costs can vary depending on how the grain is harvested, resulting in a surplus of crops, which could temporarily lower spot prices. Changes in demand and prices of competing raw materials, such as corn and rice, will directly affect the price of wheat.
With the European Union producing 152 million tons of wheat annually, China (133,600) and India (106,210), they are among the world’s largest wheat producers. The countries that have the greatest demand and consume the most wheat are the countries that suffer most from high food prices. These are generally the poorest countries as well as those in which wheat is consumed for livestock in countries that thrive on importing and exporting meat or ‘feed wheat’ products. It is also worth bearing in mind that other competing products that reduce availability or increase price will have a direct impact on wheat consumption in a country.
The countries that are the largest consumers of wheat are China with annual consumption of 131,000 (thousand tons), India with consumption of 96,725 (1,000 tons) and Australia, which uses wheat to feed its masses of livestock.
wheat trading tips
Both producers and consumers of wheat can manage wheat price risk by buying and selling wheat futures contracts. In this wheat trading strategy, producers will use a short hedge to lock in the selling price of wheat, while consumers will use a long hedge to lock in a buying price for wheat. On the other hand, traders will take the price risk that hedgers will avoid, at a profit from the wheat price movement. When prices are expected to rise, retailers purchase the item; The negative is true when speculating in the sale. Traders can keep abreast of changes with this product by keeping abreast of wheat trading news.
Grain trading can also have a direct positive or negative impact on wheat as the underlying asset for CFDs. If speculators assume that the price of the competing product will either rise or fall, it will affect the price of wheat directly. Seasonal consumption and production affect these markets, and it is important for grain traders to keep abreast of weather forecasts and political and governmental factors that will directly affect wheat-producing countries. This is the best way to get a complete understanding of the expected movement of goods during a given time frame.
Benefits of trading wheat with AvaTrade
• Up to 200:1 leverage on wheat CFD trading
• Trade in the market for 17.5 hours
• Round the clock support in 14 languages
• Internationally Regulated Currency Broker
• Both manual and automated trading platforms are available
Key questions about the wheat trade
• Why should I buy wheat?
Wheat is a unique grain in the raw material markets because, unlike corn and soybeans, it is a unique human crop. Where corn and soybeans will likely end up as animal feed, the same cannot be said for wheat. This gives it a different price dynamic that can be easier to analyze and trade. In addition, since wheat is used frequently, it can be subject to rapid price changes. It is not uncommon for limits to move in a wheat contract and are valued at $1,500 per contract. This makes wheat attractive to traders looking for quick profits.
• What should I know before I start trading in wheat?
There are two types – soft red Chicago wheat and Kansas City hard red wheat. The Chicago contract is the most liquid global wheat contract. Wheat prices can change quickly and dramatically for a variety of reasons, including weather and changing demand for wheat-based products. Of the two, weather is more important. Wheat prices are measured in cents. A movement of $0.10 in the price of wheat corresponds to a change of $500 in the price of an individual contract of wheat.
• What is the best way to trade wheat?
Those who are simply interested in speculating on price changes in a wheat contract should consider trading wheat using CFDs. This makes it possible to speculate on the price of wheat without having to worry about the complexity of trading futures and options, or the additional costs associated with each. CFD trading is a quick and easy way to access the wheat markets, plus new traders can start with smaller initial deposits. This allows them to get wet in this market without having to worry about potential big losses.
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