When it comes to grains, the weather is always the ultimate arbiter of the size of each year’s crop. The United States is the world’s number one producer and exporter of soybeans and corn. Therefore, weather in the U.S. in the primary factor that determines the path of least resistance for prices of these two important grains. Demographics, or population growth, underpin the demand for all grains as each year there are more mouths to feed around the world.
The wheat market is different than the markets for soybeans and corn. Wheat production occurs all over the world. While the U.S. is at times, the world’s largest exporter, wheat grows around the globe. However, wheat is the staple of all staple grain commodities as it is the basic ingredient in the most important foodstuff in the world, bread.
Wheat was one of the first cereals domesticated. Archaeological records suggest that wheat cultivation commenced around 11,000 years ago in what is now southeastern Turkey. Aside from a myriad of uses as a foodstuff, straw particle board, paper wheat starch, adhesives and many other household products require wheat for their production.
If you ask most people which commodity is most political, the vast majority would probably respond crude oil. That is because over recent decades, oil has been the focus of conflict in the Middle East as more than half the world’s reserves of the energy commodity are found in the region. However, over the course of history, it is not crude oil but wheat that has perhaps been the most political of all commodities.
The price of bread is a direct reflection of wheat prices. You may not notice if the price of a loaf of bread doubles as it is only a small part of your consumer spending. Many other people around the world are highly sensitive to the price of bread and throughout the course of history; political insurrection has often been a result of either an increase in the price of bread or the lack of availability. There is a great deal of conjecture as to whether the Queen of France, Marie Antoinette responded to bread shortages in France with the statement, “Qu’ils mangent de la brioche” or “Let them eat cake.” The fact is that the lack of availability of bread in France was a direct cause of the French Revolution that started in 1789.
The United States has not been immune from problems arising from the availability or price of bread. There were bread riots in Boston between 1710 and 1713. During the Civil War, bread riots occurred in March and April 1863 throughout the South. In many ways, the most recent example of revolution because of the wheat prices is the Arab Spring that began in 2010 as the result of bread riots in Tunisia. A skyrocketing wheat price led to a revolution of the hungry that spread from Tunis to Egypt and changed the political makeup of North Africa and the Middle East.