Investors looking to diversify their portfolios and hedge against geopolitical instability may want to consider adding wheat futures. According to Shawn Hackett, who writes the Hackett Money Flow Commodity Report focusing on agriculture, wheat is an excellent hedge in times of geopolitical turmoil. With ongoing conflicts such as the Russian invasion of Ukraine and attacks by Iranian-backed groups on Israel, the world is facing a significant amount of instability that could escalate further.
In times of war, the demand for wheat increases as countries seek to secure supplies to feed their populations. Historically, during WWI and WWII, wheat prices tripled, highlighting the potential for significant price increases in times of conflict. Additionally, it is common for countries to go to war after the crops have been harvested to ensure that the population is fed, further driving up demand for wheat. Since wheat is grown in almost every country, it is a crucial commodity that is needed worldwide, especially in poorer countries that rely heavily on wheat for sustenance.
For investors looking to capitalize on the potential increase in wheat prices, CBOT wheat is the wheat variety to watch. CBOT wheat is closely related to the price of Russian wheat, and with Russia being the world’s largest exporter of wheat pre-invasion of Ukraine, any disruption in Russian wheat exports could significantly impact prices. If conflicts in the Middle East escalate and lead to broader global conflict, Russian wheat prices could skyrocket, presenting an opportunity for investors to profit from rising wheat prices.
Hackett’s report predicts that 2026 will be a crescendo year for geopolitical instability, with the potential for ongoing weather volatility to further impact wheat prices in the coming years. With wheat currently priced at around $6 a bushel, the potential for prices to surge to $18 in the event of a major war or adverse weather conditions is a significant consideration for investors. Hackett advises physical buyers of wheat to take action to protect against potential price risks, either by securing supplies or investing in futures contracts.
Individual investors looking to hedge their portfolios against geopolitical instability may consider buying wheat futures contracts or investing in the Teucrium Wheat Fund, an exchange-traded fund that tracks a basket of wheat futures contracts. While there is no certainty that a major war will occur or that adverse weather conditions will impact wheat crops, being prepared for potential risks is a prudent strategy for investors. The unpredictability of geopolitical events and weather patterns makes it important for investors to consider all possible scenarios and take appropriate action to protect their investments.
