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At The Money22 July 2026

At The Money: Hungry? Should You Invest in Wheat?

2Frameworks
10Insights

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Frameworks in this episode

Finance6 steps

Three Rules for Safer ETF Execution

Use limit orders, avoid the open, and stay away from unstable new listings.

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Finance6 steps

Wait, Wait, Drought Out

Accumulate wheat near breakeven, wait for disruption, then rebalance the spike.

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Insights & moments

The myth-busts, hot takes, explainers, and tools worth keeping.

Myth Buster· 2

Myth Buster

The Biggest Wheat Grower Is Not Necessarily the Most Important Exporter

Total production alone does not determine the wheat available to world markets. A country may grow enormous quantities but consume most of the crop domestically, so investors must focus on exportable supply and disruptions affecting major exporters.

  • Domestic production and export volume are different measures.
  • India is described as a major grower that exports relatively little.
  • Russia and Ukraine are critical to internationally traded supply.
  • A disruption in an export hub can matter more than production changes elsewhere.

“there's a big difference between how much wheat is grown in a certain spot and how much wheat is exported in a certain spot.”

Sal Gilberti

“What investors care about is how much is exported”

Sal Gilberti
#exports#global trade#india#black sea
Myth Buster

War Does Not Automatically Stop Food Trade

The episode argues that food commonly remains exempt from sanctions even during war, so legal availability and actual delivery risk must be distinguished. Russian wheat could still be purchased, but ships, insurers, and counterparties could demand compensation for entering a conflict zone.

  • Food may remain legally tradable during conflict.
  • Shipping and insurance risks can still obstruct movement.
  • Markets can reverse when feared export losses fail to materialize.
  • Geopolitical headlines do not always create a lasting shortage.

“Sanctions don't go on food.”

Sal Gilberti

“you might not get a ship to go in there because of the war premium and all that.”

Sal Gilberti
#sanctions#russia#food trade#shipping

Explainer· 6

Explainer

Why Investors Use a Wheat ETF Instead of Futures

Direct futures trading requires margin, specialist knowledge, and comfort with substantial volatility. A wheat ETF packages futures inside a conventional brokerage product so investors can obtain price exposure without personally managing the contracts.

  • Futures require a margin account.
  • Commodity futures have a different risk profile from stocks and bonds.
  • The fund manages the underlying futures contracts.
  • ETF performance is designed to follow wheat futures less fees and tracking differences.

“wheat so futures of any kind are tough to trade, right?”

Sal Gilberti

“We worry about the futures inside of it, and it's designed to track um wheat prices through wheat futures.”

Sal Gilberti
#wheat#etfs#futures#brokerage
Explainer

Why Wheat Futures—not Grocery Prices—Set the Market Benchmark

Physical wheat has different prices at farms, ports, and delivery locations, making it impractical for ordinary investors to own or compare directly. Standardized futures convert those local differences into a widely observable benchmark after delivery economics are considered.

  • Physical wheat prices vary by location.
  • Buying and transporting bulk wheat is impractical for investors.
  • Futures include standardized delivery terms and locations.
  • CME soft red winter wheat serves as a major global benchmark.

“Every farm, every location has a different price for physical wheat.”

Sal Gilberti

“futures is the standard to look at to know where wheat's going.”

Sal Gilberti
#futures#physical commodities#pricing#cme
Explainer

Soft, Hard, and Durum: What the Wheat Varieties Mean

Wheat is not one uniform commodity: markets distinguish varieties by characteristics and end use. Gilberti describes soft red wheat as the commonly watched baking benchmark, while harder varieties are associated with specialty uses such as pasta.

  • Soft red wheat is commonly used for baking.
  • Hard wheats serve more specialized food applications.
  • Durum is associated with pasta production.
  • Soft red winter wheat is the principal CME benchmark discussed.

“the wheat that everybody looks at with is the soft red, and that's used for baking.”

Sal Gilberti

“the hard wheats are used more for specialty things like pasta”

Sal Gilberti
#wheat varieties#soft red wheat#durum#food
Explainer

Why the Wheat Fund Spreads Contracts Across Three Maturities

The fund distributes exposure across several contract months to reduce sensitivity to temporary front-month dislocations while retaining exposure to broad supply-driven appreciation. The structure also helps the fund operate within agricultural position limits when investor inflows surge.

  • Multiple maturities can reduce front-month volatility.
  • A broad supply shock can lift the entire futures curve.
  • Agricultural futures impose ownership limits by contract month.
  • Spreading contracts increases the fund's capacity to handle inflows.

“if you own out the curve and there's some temporary dislocation in the front month, your portfolio isn't gonna move as much”

Sal Gilberti

“agricultural commodities have very strict limits in terms of how many you can own per month.”

Sal Gilberti
#fund structure#futures curve#position limits#volatility
Explainer

Contango and Backwardation Explained with a Can of Peas

Contango reflects the ordinary cost of buying, financing, insuring, and storing a physical commodity over time, so later contracts generally cost more. Backwardation occurs when fear of near-term scarcity pushes nearby demand and prices above those for later delivery.

  • Contango is another name for the cost-of-carry structure.
  • Storage, financing, insurance, and handling raise deferred prices.
  • Backwardation places nearby prices above later prices.
  • Backwardation often signals supply or political disruption.

“cost of carry or contango is a normal market, all right.”

Sal Gilberti

“backwardation is not a natural occurrence. It's an occurrence during a disruption of some sort, be it supplied disruption or a political disruption.”

Sal Gilberti
#contango#backwardation#storage#futures curve
Explainer

Why a Few Missing Months of Wheat Supply Can Move Prices Sharply

The world carries only a limited buffer of wheat beyond current needs, according to Gilberti. A major crop failure can quickly reduce that cushion, and consecutive bad harvests can make the market exceptionally sensitive to further disruption.

  • The cited global surplus averages about six months of supply.
  • A major crop problem can reduce the buffer by several months.
  • Back-to-back failures can compound scarcity.
  • Limited inventories make prices highly responsive to supply shocks.

“You've only got on average six months excess supply at any given time in the world of wheat.”

Sal Gilberti

“What if that happens two years in a row? Now you have one month or two months.”

Sal Gilberti
#inventories#food security#crop failure#price volatility

Tool· 1

Tool

Three Levels of Wheat-Market Research

Gilberti offers different monitoring tools according to the investor's sophistication. Professionals can employ specialist analysts, engaged individuals can read the USDA's monthly report, and ordinary investors can use the futures price as a compact signal incorporating widespread research and trading activity.

  • Commodity businesses may employ dedicated analysts.
  • USDA reports provide recurring supply and forecast data.
  • Futures prices aggregate many participants' information.
  • Weather in major growing regions remains essential context.

“if you're in the business, you hire an analyst.”

Sal Gilberti

“if you're normal person, you look at the USDA report once a month. And if you're everybody just look at the futures price”

Sal Gilberti
#usda#market research#weather#futures

Takeaway· 1

Takeaway

The Two Forces That Dominate Wheat Prices

Wheat prices are primarily shaped by weather and geopolitics because both can restrict the amount available to world buyers. Drought or disease reduces the harvested crop, while conflict around export chokepoints can raise costs or interrupt transportation even when trade remains legal.

  • Drought can reduce output across major growing regions.
  • The Black Sea is a crucial geopolitical chokepoint.
  • Disease can compound weather-related crop losses.
  • Transport risk can impede supply without a formal trade ban.

“honestly, for wheat, it's it's weather and geopolitics.”

Sal Gilberti

“Black Sea is a choke point”

Sal Gilberti
#weather#geopolitics#drought#supply