Wheat Regression Paper

Background

Wheat price data begins in 1908, Wheat a chief cereal grain is used in many forms among those flour for baking goods and whose price is greatly determined by its consumption. Wheat actually comes in 3 marketable forms, soft (for baking flower) hard (for all purpose flower), and Durum for pasta production. However these are not differentiated on in the marked however they are produced in very different areas.  With Durum being produced in the South east and south as well as extensively in southern Europe. Soft varieties appear in the middle and eastern areas of the Corn Belt. Hard white wheat is favored in dry land cropping areas of the west and north, with over wintering varieties in the Mississippi delta.  In the past few years production has ranged

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Analysis

Above the historical prices of wheat are graphed chronologically, the intermittent spikes will be discussed but firstly the general curvature. The general upslope can be contributed to a congruent rise in demand fostered by a parallel population curve and inflation. However looking at real prices shows that by comparison to the early 1900s wheat is at a low point.  Both experiencing upturns about the time of the baby boom.  And escalating together from the tail of the industrial revelation almost exponentially to present day.

A more specific analysis witnesses up turns in price in times of war. During the teens and WWI we see a spike as there had been a lull in acreage planted, as well and yield. As well as an increased demand for the war time. Just after the war the onset of the great depression provides a drop in market prices with the exception of a swell in price during supply shortages of the 1930’s caused by the dust bowl. In an attempt to stabilize the industry legislation passed that created acreage allotments as well as conservation programs solving the issue of surpluses that had burdened the market. Reaching a point in 1947 as the post war world experienced a shortage. To maintain farmer incomes to ensure continued production 1951 saw the implementation of wheat direct payments to again to stabilize the market as set forth in the previous farm bill.  Soil Conservation programs also served to support prices through the 1950s as sighted by Cooper and Lawrence the commodity boom of the 1970s spurred a 159% increase on all commodity prices. Namely due to a rapid boom and regression in the world economy. This also supports the preceding fall in the later portion of the decade.  

The 1980s and after witnessed a general up trend as land set aside programs became popular in many producing countries despite a decline in per capita consumption.  (Mielke)  Bumps in market prices during the 1980s can be attributed to increased exports worldwide as more countries began to industrialize as well as import restricting tariff state side.

This past decade witnessed a drop in acreage planted and thusly production mainly attributable to the attractiveness of other commodities. However Production levels stabilized by 2009 as prices rose significantly enough to counter these effects. One final lull was witnessed in 2010 due to an outstanding crop. Though quickly recovered by current market trends as well as the vomitoxin outbreak of 2011.