The United States is a major wheat producing country, with output typically exceeded only by China, the European Union, and, sometimes, India. During the early 2000s, wheat ranked third among U.S. field crops in both planted acreage and gross farm receipts, behind corn and soybeans.

The U.S. wheat sector enters the 21st Century facing many challenges, despite a strong domestic market for wheat products. U.S. wheat harvested area has dropped off 28 million acres, or nearly one-third from its peak in 1981, for two reasons. First is declining returns relative to other crops, stemming in large part from foreign competition. Second is the availability of alternative options under government programs. U.S. wheat exports have increased modestly since the 1996/97 marketing year, partly because of increased global trade; but the U.S. share of the global market has eroded in the past two decades.

U.S. Wheat Classes

Wheat is the principal food grain produced in the United States. Wheat varieties grown in the United States are classified as "winter wheat" or "spring wheat," depending on the season each is planted. Winter wheat production represents 70-80 percent of total U.S. production. Winter wheat varieties are sown in the fall and usually become established before going into dormancy when cold weather arrives. In the spring, plants resume growth and grow rapidly until summertime harvest. In the Northern Plains, where winters are harsh, spring wheat and durum wheat are planted in the spring and harvested in the late summer or fall of the same year.

• Hard red winter (HRW) wheat accounts for about 40 percent of total production and is grown primarily in the Great Plains (Texas north through Montana). HRW is principally used to make bread flour.
• Hard red spring (HRS) wheat accounts for about 25 percent of production and is grown primarily in the Northern Plains (North Dakota, Montana, Minnesota, and South Dakota). HRS wheat is valued for high protein levels, which make it suitable for specialty breads and blending with lower protein wheat.
• Soft red winter (SRW) wheat, accounting for 15-20 percent of total production, is grown primarily in States along the Mississippi River and in the Eastern States. Flour produced from milling SRW is used in the United States for cakes, cookies, and crackers.
• White wheat, accounting for 10-15 percent of total production, is grown in Washington, Oregon, Idaho, Michigan, and New York, and its flour is used for noodle products, crackers, cereals, and white-crusted breads.
• Durum wheat, accounting for 3-5 percent of total production, is grown primarily in North Dakota and Montana and is used in the production of pasta.

Wheat milling byproducts—such as bran (outer seed coat of a wheat kernel), shorts (more inward layers of the seed coat that contain some starchy or floury components), and middlings (an intermediate fraction that consists of a combination of bran and shorts)—are used by feed manufacturers in the production of animal feeds.

U.S. Wheat Supply

Planting flexibility facilitated expansion of soybeans, corn, and other crops in traditional wheat areas. The 1996 Farm Act completed the market orientation of crop planting by eliminating the requirement to maintain base acreage of program crops in order to qualify for government payments.

The role and nature of government assistance to the farm sector is under intense debate because of variable commodity prices. While low profitability of wheat has encouraged some farmers to switch to other crops, many farmers cannot easily switch from wheat. In addition to watching market prices to decide what and how much to plant, farmers are strongly influenced by loan deficiency payments. Farmers in the Eastern United States, with higher rainfall, have more profitable alternatives to wheat than in other wheat-growing regions. Profitable alternative crop choices to dryland wheat in the Plains regions, while more limited, do exist.

U.S. Wheat Use 

U.S. consumer demand for food products made from wheat flour is relatively unaffected by changes in wheat prices or disposable income. However, demand is closely tied to population, tastes, and preferences.

The strength of the domestic market for wheat has developed out of the historic turnaround that occurred in the 1970s in U.S. per capita wheat consumption. For nearly 100 years, per capita wheat consumption declined in the United States, as hard physical labor became less common and diets diversified. Wheat consumption dropped from over 225 pounds per person in 1879 to 180 pounds in 1925 before bottoming out at 110 pounds in 1972. By 1997, consumption had rebounded to 147 pounds per capita. The rise in consumption benefited the U.S. wheat processing industry, which has operated near full capacity over the last 25 years, while expanding and modernizing.

However, the growth in per capita consumption appears to have ended. Since 1997, per capita consumption has fluctuated slightly from year to year, dropping 10 pounds during 2001 and 2002, and leveling off in 2003. The sharp drop may reflect, in part, the increasing numbers of weight-conscious consumers following diets that include fewer carbohydrates. Another force reducing flour usage (and thus, wheat consumption) is the expanding production of extended shelf life bread. The outcome for U.S. bakers is a reduction in "stales" (bread that does not sell and is taken back by the baker) from as high as 15 percent of sales to less than 8 percent. Reducing stales directly reduces the quantity of flour required to supply the same level of consumer demand. The downturn in per capita consumption has created some financial distress because of milling and baking overcapacity and has raised concerns about prospective consumer tastes and preferences.

Almost half of the U.S. wheat crop is exported. The importance of exports varies by class of wheat. The white and HRS classes rely more than others on sales into export markets:

• White wheat, two-thirds of the crop exported
• HRS, half of the crop exported
• SRW and durum, about one-third of each exported
• HRW, slightly over one-third exported

In the 1990s and early 2000s, world wheat consumption continued to expand in response to rising population and incomes, but the volume of world trade gained only slightly. Distribution of global wheat trade broadened as small purchases by a larger number of importing countries—in Southeast Asia, North Africa, and the Middle East—have together become more important than the very large purchases in the past by the former Soviet Union and China.

Challenges for the U.S. wheat sector will not abate in the foreseeable future. Other crops will be included in farmers' production decisions under current farm legislation. Although wheat products have proven to be competitive with other foodstuffs in the domestic market in recent years, foreign competition will continue to pressure U.S. wheat producers.

Research to develop new varieties and new growing methods may improve market competitiveness and increase the cost efficiency of wheat production. Improved varieties of U.S. hard white wheat, for example, have been developed using traditional genetic breeding methods, and some breeders and industry analysts believe these hard whites may open new market prospects to U.S. producers in Asia and the Middle East, where Australian white wheat now dominates. Development of genetically modified, herbicide-tolerant wheat varieties promises significant benefits to spring wheat growers, but may also introduce some uncertainty in marketing.

Wheat Futures Information

Contract Size 5,000 bushels

Wheat Futures Deliverable Grades No. 2 Soft Red Winter, No. 2 Hard Red Winter, No. 2 Dark Northern Spring, and No. 2 Northern Spring at par; No. 1 Soft Red Winter, No. 1 Hard Red Winter, No. 1 Dark Northern Spring and No. 1 Northern Spring at 3 cents per bushel over contract price.

Tick Size 1/4 cent/bushel ($12.50/contract)

Price Quote Cents/bushel

Wheat Futures Contract Months Jul, Sep, Dec, Mar, May

Wheat Futures Last Trading Day The business day prior to the 15th calendar day of the contract month.

Wheat Futures Last Delivery Day Seventh business day following the last trading day of the delivery month.

Wheat Futures Trading Hours Open Auction: 9:30 a.m. - 1:15 p.m. Central Time, Mon-Fri.
Electronic: 6:32 p.m. - 6:00 a.m. and 9:30 a.m. - 1:15 p.m. Central Time, Sun.-Fri.
Trading in expiring contracts closes at noon on the last trading day.

Wheat Futures Ticker Symbols Open Auction: W  Electronic: ZW

Wheat Futures Daily Price Limit Thirty cents ($0.30) per bushel ($1,500/contract) above or below the previous day's settlement price. No limit in the spot month (limits are lifted beginning on First Position Day)