Market Overview: Wheat CBOT (W)

Soft Red Winter Wheat futures, the most actively traded Wheat futures contract, are traded on the Chicago Board of Trade (CBOT). The first modern futures contract was for Soft Red Winter Wheat. Soft Red Winter Wheat is grown in diverse areas of the country, central Texas, towards the northeastern Great Lakes and east to the Atlantic. Soft Red Wheat is grown in more humid environments, not suited to hard grain production. The flour from Soft Red Winter Wheat is used to make cakes, cookies, snack foods, crackers and pastries.

Seasonal Overview:

Tax selling of last year’s crop has tended to weigh on prices at the beginning of the year, culminating in one of the best known seasonal tendencies in the grain markets, the "February Break". In recent years the February Break has tended to occur in late January and early February. During the production cycle of the Winter Wheat crop the predominant feature is fear that the crop will be damaged, thus reducing yields. An old grain traders saying is “ Grain Crops are killed 3 times a year”

• Once during the Fall when it is too hot/cold/wet/dry for planting or the crop to emerge
• Once during the Winter on fear of heaving, or radical changes in soil temperatures
• Once during the spring on fear that it is too hot/cold /wet/ dry for pollination

After each destruction, prices tend to break as the market worries about the coming supply.


Wheat (CBOT): (High: Dec-Jan//Low: Jun-Aug) Underlying cash market is soft red winter wheat, but all types and classes of wheat are deliverable at various premiums and discounts. Market tends to decline early in year under pressure from producer selling, spring wheat planting, and expectations for new-crop harvest May-July. Final or secondary low often comes in August, coinciding with harvest of spring wheat, before post-harvest rally into year end.

Chart courtesy of Moore Research Center, Inc.