H ard red winter wheat, grown primarily in the Great Plains, is one of five classes of wheat produced in the U.S. and is used to make bread. Hard red winter wheat accounts for around 45 percent of total U.S. wheat production and total U.S. wheat exports. Buyers of U.S. hard red winter wheat in recent years have included Egypt, China, Russia and Japan as well as other countries. Durum, around 5 percent of production, used for pasta. T he futures price is simply what a buyer is willing to pay and a seller is willing to accept for a product.
Traders shout bids and offers until they agree on the price.
The KCBT itself does not set prices. The exchange is merely the place where buyers and sellers of hard red winter wheat meet to conduct business. Bids and offers are based on the traders' assessments of supply and demand factors as well as technical indications of price relationships. F actors that influence supply and demand for U.S. wheat include crop size and crop conditions in the U.S. and other wheat-producing countries, the level of surplus or shortfall, agricultural and economic policies in the U.S. and abroad, worldwide demand for wheat, domestic flour milling needs and the relative strength of the U.S. dollar. W heat futures can be used for a variety of price protection and investment strategies.