Wheat has consistently been one of the most important food crops globally since the beginning of time. Today it ranks as the second most consumed grain in the world, being beaten only by rice in annual consumption.
The great thing about wheat is that farmers can easily grow it in a number of different climates, making it versatile and available. Wheat stays fresh for a long time and has high nutritional value. These facts ensure that wheat remains important and critical as a valuable commodity for the foreseeable future.
But does that alone make wheat a good investment?
In short the reason is the US Dollar. Due to wheat being quoted and sold against the US Dollar (like other commodities) sellers of wheat receive fewer dollars for their crop when the US Dollar is strong and more money when the US Dollar is weak. This means that a strong US dollar depresses wheat prices, but a weak US dollar lifts them.
Currently as our government spends and prints more money, the depression of the US Dollar is nearly inevitable.
Wheat as a commodity is attractive to smart investors when it is positioned to act as an inflationary hedge. As inflation occurs, the prices of raw material inputs (commodities) such as wheat rise. This means that even though inflation may depress other investments, the increase in value of the wheat helps to reduce and offset those other losses experienced elsewhere in your portfolio.
Without needing to say more it’s clear why investors are putting their money into Wheat in 2021.