Wheat is an essential ingredient in food that feeds the world. The price of wheat, like all agricultural commodities, depends on weather conditions in primary growing regions each year.
In 2008, the price of wheat rose to its all-time peak price at $13.345 per bushel as drought conditions limited supplies and caused the price to explode to the upside. At the beginning of 2000, the price of the grain was trading at $2.49 per bushel. While weather caused the rally to dizzying heights in 2008, the price of wheat has been making higher lows over the past eighteen years because of demographic factors. Global population has increased from 6 billion at the turn of the century to 7.465 billion, which means that there are 1.465 billion more people requiring food in the world these days.
While all commodities are finite resources, food is a daily essential. The rate of population growth means that each day, more people with more money compete for commodities. When it comes to wheat, history tells us that it is one, if not the most, political commodity as bread is a daily essential for people all over the globe.
A long political history for the primary ingredient in bread
Nothing can ignite civil disobedience and political upheaval like hungry people. Governments are highly sensitive to food availability because hunger has a long history of unseating those in charge. The French Revolution began as bread shortages caused royalty to literally lose their heads. “Let them eat cake” is a famous quote attributed to the Queen of France Marie-Antoinette. As the story goes, it was her response after being told that her starving peasant subjects had no bread. Her insensitivity to the hunger of her people led to a trip to the guillotine.
There are many examples of how bread shortages or rising prices have resulted in political change throughout history. The most recent example was the Arab Spring in 2010, which began as demonstrations in Tunisia and Egypt over rising bread prices and limited availability. Drought conditions in 2008 took the price of wheat, the primary ingredient in bread to the highest level in modern history at over $13 per bushel.