Wheat price relation with Oil

Student Name:
ID:
Introduction
Wheat is an essential food ingredient in human life. There are lots of food are made of this element. To some extent, it is
the major source of energy and starch in many countries (Oleson, 2014).
In this Presentation, the demand and supply of wheat and elasticity will be described further. All the major food items’
prices are related to oil prices and availability. Reasons for changing wheat prices regarding oil are also presented here
with relevant diagrams and graphics.
Wheat demand
 According to data from Statista worldwide total consumption of wheat is almost 787 million metric tons. From
2018 to 2022 the consumption rate of this commodity increased by almost 1.2 % every year (Statista, 2022).
Wheat demand

 The per capita use of wheat globally is almost 67.7 kilograms (Statista, 2022).

 Country wise China is the biggest consumer of Wheat and the following are European Union, the United States and
India (Rastogi, 2022).
Wheat Supply
 Russia supplies almost 23.92% of the world’s demand for wheat followed by Canada, which supplies 12.44% of the world
demand. For last 20 years the leading wheat producer in the world is China (Rastogi, 2022). .

 On the other hand European Union is in the first place to produce wheat combined (Statista, 2022).
The elasticity of Wheat demand and supply

 Elasticity explains a small change in price results in an impact on changes in

demand. Elasticity Explains the small change in price result an impact on changes
of demand.

 As far as the demand is concerned, the demand for this product is always high.
But the change in demand does not impact the price level of this commodity So,
the other hand the demand of Wheat is inelastic (UKessay, 2022).
Price hike of Wheat

 Russia- Ukraine war situation creates a huge problem for the supply chain of
wheat over the world. Russia declares not to export wheat to European
countries, and because of the war situation, Ukrainian business traders have
also been unable to provide or supply this essential product to the demand full
countries (Mottaleb et al., 2022).
 As consequence, the demand for Wheat and wheat products get increased and
subsequently the price of the essential good get hiked over time (Gulati &
Sharma, 2020).
Reasons for Price hike
There are lots of reasons why the price of Wheat is getting high nowadays. Some of
the reasons can be explained as to why such a hike happens. Some of the
important issues are mentioned here (Nair & Eapen, 2011) & (MROnline, 2022).

Russia-Ukraine war
Increase in Oil price
Dwindling supply
Inflation
Less productive lands
Global food crisis
Oil price relation with wheat Price
The oil price has a direct and integrated relationship with the wheat price. Because the change in oil price
impacts the transportation sector. Transportation and logistics determine
Oil is vastly used to produce electricity. Increases in the cost of electricity eventually increase the price of pre-
production materials or ingredients, such-fertilizers, extracting water and so on the commodity price
everywhere related to wheat.
This diagram below show the data of last decade, that how the wheat price increases as the oil price moved
upwards (Researchgate, 2022).
Substitute and Complements of Wheat

 There are lots of food products that are been used as substitutes for wheat. As
such: Flour of rice, potato, tapioca, oat, corn, buckwheat and so on
(Investopedia, 2022).

 Complementary goods are used to or consumed with the main food generally to
satisfy a particular desire or want. Some of the complementary food that are
been used with wheat products are Oat, Chickpea, yellow maize, powder of
avocado pulp and so on (Webmd, 2022).
References:
1. Oeson, B.T., 2014. World wheat production, utilization and trade. In Wheat (pp. 1-11). Springer, Boston, MA.
2. Mottaleb, K.A., Kruseman, G. and Snapp, S., 2022. Potential impacts of Ukraine-Russia armed conflict on global wheat food security: A quantitative exploration. Global Food
Security, 35, p.100659.
3. Gulati, A. and Sharma, P.K., 2020. Prices, procurement and production: An analysis of wheat and rice. Economic and Political Weekly, pp.A36-A47.
4. Nair, S.R. and Eapen, L.M., 2011. Wheat price inflation in recent times: Causes, lessons and new perspectives. Economic and Political Weekly, pp.58-65.
5. Chen, S.T., Kuo, H.I. and Chen, C.C., 2010. Modeling the relationship between the oil price and global food prices. Applied Energy, 87(8), pp.2517-2525.
6. Capitalist, V., 2022. Which Countries Produce the Most Wheat?. [Online]
Available at: https://www.visualcapitalist.com/cp/visualizing-global-wheat-production-by-country/
7. Forum, W. E., 2022. These are the top 10 countries that produce the most wheat. [Online]
Available at: https://www.weforum.org/agenda/2022/08/top-10-countries-produce-most-wheat/#:~:text=Over%20the%20last%20two%20decades%2C%20India%20has%20produced
%2012.5%25%20of,largest%20global%20exporter%20of%20wheat.
8. Investopedia, 2022. Substitute. [Online]
Available at: https://www.investopedia.com/terms/s/substitute.asp
9. MROnline, 2022. Why are global wheat prices rising so much?. [Online]
Available at: https://mronline.org/2022/06/16/why-are-global-wheat-prices-rising-so-much/
10. Rastogi, K., 2022. Which Countries Produce the Most Wheat?. [Online]
Available at: https://www.visualcapitalist.com/cp/visualizing-global-wheat-production-by-country/
11. Researchgate, 2022. Nominal wheat and crude oil price. [Online]
Available at: https://www.researchgate.net/figure/Nominal-wheat-and-crude-oil-price_fig4_254459591
12. Statista, 2022. Global wheat consumption 2017/2018-2021/2022. [Online]
Available at: https://www.statista.com/statistics/1094056/total-global-rice-consumption/
13. UKessay, 2022. The Inelastic Price Demand For Wheat. [Online]
Available at: https://www.ukessays.com/essays/economics/the-inelastic-price-demand-for-wheat-economics-essay.php#:~:text=The%20supply%20of%20wheat%20is%20elastic
%20which%20means%20a%20small,large%20change%20in%20quantity%20demanded.
14. Webmd, 2022. Guide to Non-Wheat Flours. [Online]
Available at: https://www.webmd.com/food-recipes/ss/slideshow-nonwheat-flours-overview