CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Wheat trading: what is it and how does it work?

Despite taking repeated blows in the market recently, experts predict a rise in wheat prices, due to current global uncertainty. Read on to learn how you can grain up your portfolio by getting exposure to wheat prices.

Wheat Source: Bloomberg

What is wheat trading?

Wheat trading is the act of speculating on the upward or downward price movements of wheat without taking actual ownership of the underlying commodity. You can trade upward and downward price movements.

Wheat is classified as a soft commodity because it’s a naturally occurring raw material that’s grown, harvested and processed for human consumption. This is unlike hard commodities, which are mined or extracted from the earth and used in manufacturing.

Commodities are mass-produced and the pricing is standardised – meaning it remains the same the world over. Like all other stocks, commodities are bought and sold over dedicated exchanges.

The only difference, however, is that commodities can be bought and sold at current or future prices – a key factor to consider for traders who want to add wheat to their portfolios. Other factors that could have an impact on wheat prices include breaking news or political events, seasonal cycles and weather.

Learn more about commodities and how to trade or invest in them

Image showing the different ways to trade wheat and the external factors that impact the wheat industry.
Image showing the different ways to trade wheat and the external factors that impact the wheat industry.

How to trade or invest in wheat

There are a few ways you can start trading or investing in wheat with us. CFDs are a popular choice if you’re looking for leveraged, short-term exposure to wheat price movements without taking ownership of the underlying asset. You can trade wheat on the spot, or get exposure via futures or options.

If you’re more interested in longer-term growth, our stock trading platform is the vehicle for investing in wheat stocks and ETFs.

To get started, follow these simple steps:

  1. Decide how you want to trade or invest in wheat
  2. Create a commodity trading account
  3. Find out how wheat trading works
  4. Identify your opportunity
  5. Take a position and monitor your trade

Learn more about how to trade or invest in commodities

Wheat futures

Wheat futures are contracts that enable traders to place leveraged trades on the commodity for a fixed price at a pre-determined date in the future.

By entering into the contract, both the buyer and seller are obligated to either buy or sell on or before its expiry date.

To start trading wheat futures with us, you need to follow the steps below:

  1. Create an account
  2. Learn how to trade futures
  3. Pick wheat commodity futures
  4. Decide if you want to go long or short
  5. Take your first position
  6. Remember to set your stops and limits
  7. Monitor your trade

Wheat options

Wheat options are contracts that give you the flexibility to trade wheat without the obligation to buy or sell at the underlying asset at a set price within a set timeframe. With CFDs, you can gain exposure to wheat prices while paying zero commission.

Here’s how you can start trading wheat options today:

  1. Discover how options trading works
  2. Understand the difference between buying and selling options
  3. Choose your strategy
  4. Create an account
  5. Open your first trade

Learn more about how you can trade options with us

Wheat stocks

Investing in wheat stocks gives you ownership of the actual assets – ie wheat company shares. Plus, you’ll get voting rights and earn dividends if the company grants them – since you own the stocks. You can invest in wheat stocks using our stock trading platform.

To start investing in shares, you need to:

  1. Understand how stock trading works
  2. Create a stock trading account
  3. Find an opportunity
  4. Take a position
  5. Monitor your trade

Once you’re ready to invest in wheat shares, you need to decide how you’d like to buy or sell your stocks:

  • At quote – by telling us how many shares you want to buy or sell, and we help find you the best price
  • On exchange – where you buy or sell directly from the market, giving you access to market orders

Our stock trading platform give you access to a wide range of wheat stocks, including:

  • Teucrium Wheat Fund – gives investors exposure to wheat futures in a brokerage account
  • WisdomTree Wheat – gives investors exposure to wheat prices by tracking the Bloomberg Wheat subindex
  • Chicago Wheat – possibly the largest wheat futures contract, trading over 15 million tons daily

Learn more about stock trading with us

Wheat ETFs

Wheat ETFs (exchange traded funds) give you diversified exposure to multiple wheat shares by tracking the performance of the stocks contained withing that ETF. Like wheat stocks, you can invest in wheat ETFs through a stock trading account.

Our platform gives you access to a range of ETFs from world-leading providers, including:

  • WisdomTree Wheat – designed to give investors exposure to a total return investment in wheat by tracking the Bloomberg Wheat subindex
  • WisdomTree Wheat 3x Daily Leveraged ETF – gives investors three times leveraged exposure to a total return investment on wheat futures by tracking the Bloomberg Wheat subindex
  • Teucrium Wheat Fund – gives investors exposure to wheat futures in a brokerage account

Learn more about investing in ETFs with us

To start investing in wheat ETFs, follow the steps below:

  1. Create a stock trading account
  2. Find out how investing in ETFs works
  3. Buy and sell wheat ETFs directly on our platform

Is wheat a good investment?

Wheat commodities remain a popular investment, especially in times of economic and market uncertainty, where they’re seen as an inflation hedge against the US dollar, as they’re priced in USD. So, if dollar performance weakens, inflation often rises, which boosts wheat prices.

For investors looking to diversify, wheat commodities are also a common breakaway from the ‘traditional’ company stocks and bonds.1

Grain markets, a growing performance?

Although the Russia-Ukraine conflict’s caused turmoil to global markets, wheat commodities, in particular, took a hard hit. This is because both Russia and Ukraine (who account for close to a third of all global exports) seized production, sparking fear of possible food shortage.

Despite the chaos caused by the conflict, demand for wheat is predicted to increase over the years. This is due to its diverse use as a source of food for both human and animal consumption, as well as the ease with which it grows, compared to other grains.2

While wheat commodity prices may have dropped sharply over recent months, they still remain 30% higher than before the Russian conflict put a halt to most European exports. Although the discord’s caused great disruption to European exports, it’s opened up opportunities for other emerging markets like India, whose pricing is seen as more competitive than the current high global prices caused by the current shortage.3

Image of WisdomTree Wheat chart showing its five-year performance
Image of WisdomTree Wheat chart showing its five-year performance

Wheat trading and investing summed up

  • Wheat trading involves speculating on the price of wheat without taking actual ownership of the underlying asset or commodity
  • In times of economic or market uncertainty, wheat commodities are a good hedge against a weak dollar
  • The demand for wheat commodities is predicted to increase over the years
  • There are a few ways to trade or invest in wheat with us, for example CFD trading and stock trading

Footnotes:

1 Live Mint, 2022
2 Commodity.com, 2022
3 Trading Economics, 2022


This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

Speculate on commodities

Trade commodity futures, as well as 27 commodity markets with no fixed expiries.

  • Wide range of popular and niche metals, energies and softs
  • Spreads from 0.3 pts on Spot Gold, 2 pts on Spot Silver and 2.8 pts on Oil
  • View continuous charting, backdated for up to five years

Put learning into action

Try out what you’ve learned in this commodities strategy article risk-free in your demo account.

Ready to trade commodities?

Put the lessons in this article to use in a live account – upgrading is quick and simple.

  • Deal on our wide range of major and niche commodities
  • Protect your capital with risk management tools
  • Enjoy some of the best spreads on the market – Spot Gold from 0.3 points

Inspired to trade?

Put what you’ve learned in this article into practice. Log in to your account now.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.