How Big Is the Wheat Market?

Not so big, really. US production is around $10 billion annually and global output is about 10X that. For comparison, dairy production in the US is worth about $30 billion annually. The US consumes $10 billion in oil in about a week.

So when you're talking about the CBOT's Soft Red Winter Wheat contract, which represents only about 20% of US wheat production, you are talking about a $2 billion dollar crop in annual sales. Right now, the question is where to put all the wheat piling up due to lower exports and lower domestic consumption, but it's easy to see how this market can be "influenced" by large traders in tighter conditions.

Today, the wheat market finished within a couple of ticks of the opening levels and within a penny of last Friday's close. As the market consolidated at these levels, near recent lows, I added to long MGEX/ short CBOT May positions. The biggest worry for these positions is a weak USD that drives up general commodity prices and forces CBOT shorts to cover.