The following five crops will be produced on a rotational basis, of which all are considered critical on the soft commodities market:
Barley
Barley is a major animal feed crop, with smaller amounts used in malting and in health food. It is also used in beer and whisky production. As the demand for meat grows (developing nations are eating more meat as incomes increase) so too does the demand for barley. It takes seven kilograms of crops to make one kilogram of beef, and it is for this reason that there will continue to be a high demand for barley.
Barley is the fourth most produced crop worldwide, and is known for its strong yields, particularly as it has a short growing season and is relatively drought tolerant.
Current market price: 128.7 (US$/mt)*
Current futures price July 2011: 156.10 (US$/mt)**
Rapeseed
Rapeseed is grown for the production of animal feed, vegetable oil and biodiesel. According to the USDA, rapeseed is the third leading source of vegetable oil in the world, and is also the world’s second leading source of protein meal. The oil is considered to be one of the most heart-healthy oils, and reportedly reduces cholesterol. Production of rapeseed is growing fast, with the Food and Agriculture Organisation reporting that 2008 produced the highest recorded total at 46.4 million metric tonnes.
Current market price: 901.37 (US$/mt)*
Current futures price July 2011: 930 (US$/mt)**
Sunflower
Sunflower is used for a variety of reasons. It is grown for cooking oil, margarine, and as livestock feed. Sunflower also produces latex and is the subject of experiments to improve its suitability as an alternative crop for producing hypoallergenic rubber. It may also be used to extract toxic ingredients from soil, such as lead, arsenic and uranium.
Sunflower is also used as a ‘carrier oil’ in the production of bio-diesel, creating significant demand as new ways of producing sustainable fuel are needed. Current market price: 1,043.81 (US$/mt)*
NB: No futures market is trading for this crop
Wheat
Wheat is the third most produced crop in the world and is used for thousands of items including: bread, breakfast cereal, beer and vodka.
It is also used as a forage crop for livestock and for construction material. Importantly, wheat crops supply much of the world’s dietary protein and food.
It is also grown for biofuels, producing a source of ‘carbon-negative’ fuel which is considered critical in the fight against global warming, with a number of governments implementing expansion of the production of wheat for this reason.
Wheat is widely cultivated as a cash crop because it produces a strong yield per unit area, grows well in many climates even with a moderately short growing season, and produces a versatile, high-quality flour that is widely used in baking. The popularity of foods made from wheat flour, along with its biofuel properties, has therefore created a large demand for the grain.
Current market price: 247 (US$/mt)*
Maize
Maize (or corn) is a cereal grain and is the most widely grown crop, with more produced each year than any other grain.
It is widely used in food production and is a major source of starch, used to cook industrialised food. As researchers look for innovative ways to reduce fuel costs, maize has been used to make biomass fuel, such as ethanol. This has led to recent harvests being one of the most profitable maize crops in modern history for farmers.
Current market price: 179.9 (US$/mt)*
Current futures price July 2011: 196.84 (US$/mt)**
* All prices are based on June 2009 figures available from the World
Bank Global Commodities Index and USDA, as well as Chicago Board of Trade. Note, wheat price is based on production of Hard Red Winter wheat, the dominant wheat grade grown in Ukraine.
** Futures prices based on current global commodities index long-term futures contracts for July 2011.