Wheat has been a major commodity for consumer, farmer, and finished goods producer since ancient times. It has been farmed and improved probably from ~10,000 BC at least in the upland Middle East and doubtless elsewhere. Wheat and precursor grains on the road to wheat were gathered forever.
There are scattered references to wheat prices in Sumerian, classical Greece and Roman Empire days. North Africa, Sicily and Egypt were major sources of wheat for Roman Italy and especially the city of Rome where wheat distribution was an important part of the socio-political pact of "bread and circuses".
There are nearly complete English monthly wheat price records from the mid 13th century in English shillings per Winchester quarter (eight bushels). This price series has been put together from many different sources, so the prices are not constantly basis the same location. Many of the early price records came from church land accounts. 
The median market price for wheat in England from the mid 13th century to just after 1500 was approximately five shillings per Winchester quarter. At today's exchange rate of £1 = $1.46, 13th=14th century English wheat sold for approximately $0.045 cents, or four and one-half cents per bushel. On December 26th 2008, Chicago soft cash wheat sold for $4.39 and Kansas City hard wheat for $5.39. Wheat thus now sells for approximately 100 times its value in the 13-14th centuries. By comparison, wheat sold as low as 40 cents per bushel basis Chicago at the 1932 lows.
The chart of wheat in England shows that there have been two major price escalations since the 13th century, one from approximately 1500 to 1640, and the modern escalation from 1932 to date. Both escalations were close to tenfold from the low of the previous range to the low of the new range, from 4 US cents to 40 cents and now 400 cents. In both escalations gold valuation and circulation played a major role. Excluding the extraordinary increases during the Napoleonic wars and into about 1815 (Long Wave top), wheat prices traded in a band roughly between 25 and 60 shillings (23-68 cents) from 1640 to 1932. During most of that period, from 1717 when Isaac Newton set the price of gold at £3.17s.10½d (approximately $20.90 at the pre-1930's exchange rates), the developed world was on the gold standard. Despite the universal currency devaluations in Europe and America in the 1920's and 30's, the world remained on gold until 1971, although the standard in tatters after 1934 and more so after 1944.
Wheat increased 32 fold in price from the 1932 low of 40 cents per bushel to the 2008 high of $12.80 or 1280 cents basis December Chicago wheat. There were several bounces off the 960 level (3/4 of 1280 and 24 *40) on the way up to and down from 1280 before making a low just under 480 (12 * 40). 480 is 3/8 of the 1280 high. Wheat has just closed at 663 basis December 2009 wheat (WZ9) which just above the half-way mark of 640 which was the top of the range for wheat from 1974 to 1999. If December 2009 wheat can stay above this level it's quite possible the low is in and that the current global battle to reflate prices will be successful.
Recent Comments