How to invest in wheat

Wheat is the second most popular grain in the world and is used for both human consumption and livestock feed. This beginner friendly guide helps you learn how to invest in wheat.
By: Prash Raval
Prash Raval
When not researching stocks or trading, Prash can be found either on the golf course, walking his dog or… read more.
Updated: Mar 4, 2022

On this page learn how to invest in wheat. We explain the many reasons you may want to invest in it, how to invest in it, and offer an outlook for the year ahead. Continue reading to learn more. 

Where can I invest in wheat online?

If you’re ready to jump in and start investing straight away then check out the table of brokers below. Selected by our commodity experts, these platforms are some of the best places to invest in wheat. Click any of the links to sign up in just a few minutes.

1
Min. Deposit
$10
Promotion
User Score
10
0% Commission & 0%
Award-winning platform
Deposit using PayPal + 9 other deposit options available (not available to US users)
Start Trading
Description:
Payment Methods
Bank Transfer, Wire Transfer
Full regulations list:
CySEC, FCA
eToro is a multi-asset platform. 68% of retail investor accounts lose money when trading with this provider. You should consider whether you can afford to take the high risk of losing your money.
2
Min. Deposit
$0
Promotion
User Score
9.3
World's biggest online bullion market
High-security vaults based Zurich, London, Toronto, Singapore and New York
Next-day withdrawals
Start Trading
Description:
BullionVault lets private investors around the world access the professional bullion markets. You can benefit from the lowest costs for buying, selling and storing gold and silver.
Payment Methods
Full regulations list:
3
Min. Deposit
$10000
Promotion
User Score
8.7
Quotes for precious metals 24hrs
Secure storage in Switzerland
Physical gold and silver (high-quality bullion bars and coins
Start Trading
Description:
Goldbroker was created to allow investors to protect their wealth through direct ownership of gold and silver. Get live precious metals quotes 24hrs a day, 5 days a week, in more than 110 currencies.
Payment Methods
Full regulations list:

Why invest in wheat?

For many people the primary reason to invest in commodities such as wheat is to hedge against inflation. Although, there are a range of other reasons why putting your money in the wheat market is a good idea and in the section below we’ve highlighted some of the top ones. 

  • Hedge against inflation. The price of many soft commodities like wheat tends to go up when inflation increases. Inflation is when money loses value over time and results in a higher cost of living. Investing in wheat when inflation rates are on the rise is a good way to protect, or ‘hedge’ against it. 
  • Portfolio diversification. Many investors usually stick to stocks, shares, and bonds. The addition of wheat is an easy way to diversify a portfolio and include a commodity that’s used worldwide. Including wheat allows you to spread your money across different investments, while bolstering your portfolio when the stock market is down. 
  • Currency speculation. A lot of commodities are priced in US dollars and that’s the case for wheat. Analysing the dollar can help time your investment into it because if the dollar is strong, wheat importers will be faced with higher costs pushing its price higher, while a weak dollar would result in cheaper wheat.
  • Global demand. Wheat is widely used around the world for both humans and livestock. Developing countries who have growing populations are expected to increase their consumption of wheat as it’s a relatively cheap grain. Investing in it provides a way to capitalise on population growth. 

How to invest in wheat

Investing in wheat is a straightforward process and if you want to get started, you can follow the steps below. 

  1. Decide on an investment strategy. Before you start, you’ll need to decide if you are going to be a passive or active investor. You should also think about how much risk you are willing to take on, as this will guide you towards how to invest. 
  2. Do your research. Conducting research into the wheat market will help you in choosing the right method for investing in it. Further down this page we’ve explained the different ways you can invest in wheat. 
  3. Set a budget. You may know how much you are prepared to risk and its a good idea to set a budget. It goes without saying to never risk more than you can comfortably afford to lose. 
  4. Choose between the long term and short term. While researching the market you may have determined a future outlook for wheat. Choosing between the long and short term can help you pick the right investment type. 
  5. Find an investment platform. Wheat is a widely traded commodity and lots of brokers offer it, although some are better than others. At the top of this page we listed a few of the top ones around for wheat investing. 

Ways to invest in wheat

Investing in wheat can be done through a range of different methods, from buying stocks to trading futures. Below we’ve explained the ways in which you can invest in wheat and highlighted the benefits of each one. 

Invest in wheat stocks

If you don’t want to invest in wheat directly, you can consider investing in companies that are involved in any aspect of wheat production. There are currently no pure play wheat businesses available to invest in, although there are many agricultural companies who include wheat production as part of their operations. 

Invest in wheat ETFs

Investing in ETFs is the easiest way to gain exposure to wheat. Exchange traded funds that track the price of wheat, or include agricultural business make an easy and cost effective way to speculate on the price of wheat. There is only one ETF that directly tracks wheat’s price, although there are many agricultural focused ETFs available. 

Invest in wheat mutual funds

Mutual funds are similar to ETFs and investors can buy shares in them. Although, a mutual fund is managed by a professional fund manager who buys and sells assets according to their own expertise. There are no pure wheat mutual funds, however there are a number focused on the wider agricultural sector, which gives some exposure to the wheat market. 

Invest in wheat futures

For investors wanting to speculate on the short term price changes of wheat, futures are the most common approach. Futures contracts are an agreement to make a trade at a pre agreed date in the future. Trading in futures contracts is a difficult task and requires in-depth knowledge of how the wheat market works and is suited to experienced investors. 

How does the wheat market work?

It works like most other markets and its supply and demand have a direct impact on its price. Futures contracts are also an important part of commodity markets as thats where the majority of speculation and commercial buying or selling occurs. Below we’ve highlighted some of the key drivers that move the price of wheat. 

  • Weather. It’s no surprise that the climate in wheat growing regions impacts its price. Extreme heat or rainfall can reduce crop yields, which in turn can lower supply. Wheat is grown worldwide, although Europe, China, and India are its largest growers. Keeping tabs on weather conditions in these regions could help with monitoring potential supply shortages. 
  • Geopolitics and supply. Like weather, wars and domestic issues can cause serious disruption to global supply chains. For instance, almost a third of the world’s wheat is grown in Russia and Ukraine, so the Russian invasion in February 2022 sent prices sky high and prompted fears of widespread wheat shortages.
  • Population growth. Wheat’s popularity around the world has resulted in its demand growing for years. As the global population increases, wheat consumption will likely increase too. Developing nations tend to accelerate this demand as population growth is seen highest in these regions. 
  • US Dollar. The majority of soft commodities are priced in US Dollars and that is the same for wheat. A strong dollar against other currencies would make the price of wheat higher as importers would have to pay more. While a weaker dollar would decrease the price of wheat. 
  • Stockpiling. Many countries stockpile a range of grains including wheat and any changes in levels of wheat held can impact its price. China is the world’s largest grain stockpiler and holds two thirds of global grain reserves. China’s stockpiling needs to be considered as an important factor in wheat price.

When should you invest in wheat?

It will depend on your investment goals and strategy. At the moment, wheat prices are extremely volatile in the aftermath of the Russian invasion of Ukraine and it’s difficult to predict how the war is going to play out. It’s a situation best suited to traders or those who are happy to take more of a risk.

In general, however, one of the most opportune times to invest in wheat is when inflation rates are on the rise. As we’ve already mentioned, commodity prices tend to rise along with inflation, so investing in wheat when inflation is on the rise often makes for a good strategy.

You may also want to consider the factors we discussed in the section above. For example, poor weather conditions in China, India, or Europe could drastically reduce crop outputs and drive wheat prices higher. It is also worth monitoring the US dollar and investing in wheat when it is strong against other currencies. 

Is wheat a good investment in 2022?

It may be, but there are a few things to take into consideration before making a decision. The global political and economic outlook for the next year is uncertain, with the war in Ukraine ongoing and global inflation rates on the increase. While that mix suggests wheat prices could go even higher, extremely high food prices are difficult to sustain for long. Suppliers might choose to switch away from wheat and to other, cheaper grains, or governments may intervene rather than leave their populations to fend for themselves.

What should I do now?

Now that you might be ready to invest in wheat, it would be a good idea to register with a broker. You can click the blue button below to be taken to our list of expertly selected platforms offering wheat. Alternatively, if you want to improve your investing and trading skills, you can check out any of our free courses using the links below.

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Prash Raval
Financial Writer
When not researching stocks or trading, Prash can be found either on the golf course, walking his dog or teaching his son how to kick a… read more.