At The Money: Investing in Wheat (July 22, 2026)
Do you want to own a core food staple as a geopolitical hedge, an inflation offset, or simply as a diversifier? There’s an ETF for that!
Full transcript below.
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About this week’s guest:
Sal Gilbertie began trading agricultural and energy commodities in 1982 at Cargill, DLJ, Merrill Lynch, and Bear Stearns. He founded Teucrium in 2009, launching commodity-based AG products like the Teucrium Corn Fund (CORN) and the Teucrium Wheat Fund (WEAT), as well as soybeans and sugar futures markets through ETFs.
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TRANSCRIPT:
At the Money: Buying and Selling Wheat in Your Investment Accounts
With Sal Gilbertie, Founder, CEO & Chief Investment Officer, Teucrium Trading
“To die, before the Harvest the crop the grains fields of rippling wheat.
Wheat. All there is in life is wheat.”
“Sonia, Here’s your chance to do something kind for a dying boy but I don’t really love Boris I mean I love him but I’m not in love with him
Wheat lots of wheat fields of wheat a tremendous amount of Wheat”-Love & Death
BARRY RITHOLTZ: Ever since Russia invaded Ukraine, grain prices have exploded. Gaining exposure to a grain like wheat is usually a challenge. Futures are an entirely different animal than stocks or bonds — they have a very different risk profile, not only from stocks, but even against options. There’s a whole lot more downside with futures. The wheat ETF doubled after the war started and has come back down to pre-war levels. Is wheat a fit for your portfolio? I’m Barry Ritholtz, and on today’s edition of At the Money, we’re going to explore the question of buying and selling wheat in your investment accounts.
To help us unpack all of this and what it means for your portfolio, let’s bring in Sal Gilbertie. He’s founder, CEO, and Chief Investment Officer of Teucrium Trading, best known for creating exchange-traded funds that give investors direct exposure to agricultural futures. He’s also an old-school commodity trader, going back to 1982. So what was the problem that the wheat fund — symbol WEAT — was designed to solve for investors who wanted exposure to wheat, but are a little skittish about holding futures directly?
SAL GILBERTIE: Well, thanks for having me, Barry. So futures of any kind are tough to trade, right? You’ve gotta have a margin account. They’re volatile. It requires a different expertise. And when I heard about ETFs — I didn’t even know what an ETF was when I founded this company — I found out and said, wow, that’s brilliant, ’cause I always traded commodities and futures, and I said, anybody can buy these things in their stock account. That’s amazing. And so we package these things inside of ETFs, and the wheat ETF’s been very popular. I don’t know if you know Andy Hecht, but he basically says wheat is a more political commodity than oil. It’s older — I think it’s mentioned 50 or 70-something times in the Bible. Wheat is wheat — it’s a big deal. Also, of the crops, I think a higher percentage of wheat is directly consumed by humans than, say, corn or soybeans, which also go to animals and fuel and all that. Now, as an aside, you can run wheat through an ethanol plant if it’s lousy and it’ll turn into ethanol, but that’s not a common thing. Wheat is so integral to human life, basically — bread, tortillas — it’s a big deal. You’ve gotta have wheat.
And so we thought there should be a wheat fund. We started this fund and we structured it — we think properly — so people can buy it in their stock account. They don’t need a margin account; like any other ETF, they can buy it. We worry about the futures inside of it. It’s designed to track wheat prices through wheat futures: when they go up, the fund’s designed to go up, and when the wheat futures go down, the fund’s designed to go down — less some fees and expenses and a little bit of static. But it generally works pretty well.
BARRY RITHOLTZ: So you mentioned prices. You’re not talking about the cash price of physical wheat — you’re talking about the CBOT price, the futures price. What’s the distinction between the two? How do investors see this reflected in their grocery prices?
SAL GILBERTIE: Well, there’s kind of a disconnect — not a direct disconnect — but wheat prices are gonna move up and down on a bulk level, on a wholesale level. Investors can’t buy that. I mean, you want to buy a truckload of wheat or a cargo load of wheat somewhere and ship it around? It’s impossible. So you use futures as a proxy. They have delivery points; each delivery location is gonna be a different price. But the advantage of futures — and the CME futures are the global standard, basically, for soft red winter wheat — is that all you have to do is look at that price. Every farm, every location has a different price for physical wheat; it doesn’t matter. It all gets to be a futures-equivalent price when you factor in delivery. And so futures is the standard to look at to know where wheat’s going. That’s what you’re looking at.
BARRY RITHOLTZ: You mentioned soft red winter. When I was doing some research for this conversation, I was kind of shocked at how many distinct wheat markets there are: hard red winter, hard red spring, soft red winter, white wheat, durum. What are all these different wheats?
SAL GILBERTIE: So in general, all you need to know is that the wheat everybody looks at is the soft red, and that’s used for baking — in general, just home baking, that kind of stuff. The hard wheats are used more for specialty things like pasta. But unless you’re a chef, who cares? You’re gonna buy your wheat in your grocery store, and that’s fine — generally you’re buying soft, unless you’re buying a specialty wheat for whatever you want to do. And soft wheat is the benchmark for wheat prices — global wheat prices — on the CME.
BARRY RITHOLTZ: Huh. The USDA does forecast out for the rest of the year into next year. They’re forecasting hard red winter wheat at its lowest price since 1957–58. How on earth is that possible — that 75 years later, wheat prices are still the same? It just seems crazy to me.
SAL GILBERTIE: So, farming advancements — and we’ve kept up with demand. That’s what’s happened. That’s why the ags get a bad name, because people say, well, inflation-adjusted, your return is zero or negative. Well, okay, but if you’ve got that commodity, it’s very cyclical. It trades at a flatline — basically it trades at breakeven, because farmers are subsidized. And then when it doesn’t rain somewhere, or there’s a political upheaval like in Ukraine, the price explodes higher — when there’s a drought in the upper Midwest. Granted, wheat is grown in virtually every country. And wheat probably has —
BARRY RITHOLTZ: It’s the most consumed staple food crop — it’s in everything, and everybody eats it.
SAL GILBERTIE: Everything, and everybody uses it. What matters to the price of wheat is how much is available for export. And wheat, versus corn and soybeans, probably has more countries that export it in volume than the other two big ones. And so it’s important to know that a disruption in the United States wheat belt, a disruption in China or India — and I believe India is the number one grower of wheat in the world, but they don’t export it.
BARRY RITHOLTZ: Oh, that’s really interesting.
SAL GILBERTIE: Well, there’s a big difference between how much wheat is grown in a certain spot and how much wheat is exported from a certain spot. What investors care about is how much is exported. And that’s why, during the Ukraine war, wheat prices exploded higher — because of the amount exported out of the Black Sea from Russia and Ukraine, which are both in the top five global wheat exporters. Russia’s number one by far. The EU is right up there as a bloc. So most of the world’s exports come out of that whole area. Australia is an enormous exporter. In fact, I believe the record-high wheat price is still intact, even after COVID and the Ukraine war — we’d have to go look it up, but it was intact for years, based on back-to-back droughts in Australia back in, I think, the early two thousands or —
BARRY RITHOLTZ: Nineties. Wow, that’s amazing. So you had mentioned futures trading and how different it is from traditional options trading — where there is a similarity: different maturities, different expiration dates. WEAT holds three distinct contracts across three different maturities, about a third each — a little more, a little less. Why go with that structure? That’s really kind of interesting, that sort of spread you’ve created.
SAL GILBERTIE: Two reasons. One is, as we’ve said, these are more strategic allocation products. So they trade flatline for quite a while at your breakeven, and then they explode higher. So investors kind of layer in a percent or two in their portfolio when they’re low, and they just sit on them — and then, when they go higher, they get out. In fact, there’s an expression: weight it into your portfolio when they’re at breakeven — W-E-I-G-H-T — then wait, W-A-I-T, and when there’s drought, get out. So it’s weight, wait, drought out. And that could take —
BARRY RITHOLTZ: A couple of years. Weight, wait, drought out. Yeah.
SAL GILBERTIE: Weight, wait, drought out. An RIA told us that — we didn’t make that up. So what happens is, when you layer these things into your portfolio, you’re kind of sitting on them for a while. If we just held spot-month futures, there’d be a lot more volatility, and what you really want is the general price appreciation when the price goes up. You’re buying this thing for the price to go up, and you’re buying it for portfolio stability — you’re gonna have more stability. Because if you own out the curve and there’s some temporary dislocation in the front month, your portfolio isn’t gonna move as much. So you’re gonna have less volatility in that holding. Yet if there’s a true supply disruption and the whole structure of the curve moves up over the course of half a year or a year, you’re gonna participate in that. And so that’s what we designed for investors.
The other practical matter is that these things have limits. Agricultural commodities have very strict limits in terms of how many contracts you can own per month, and if we just concentrated this fund in one month, we wouldn’t be able to handle all the money that comes in. Before the Ukraine war, we had about $80 million in this fund. Within weeks after the Ukraine war broke out, we had $800 million in the fund.
BARRY RITHOLTZ: Wow.
SAL GILBERTIE: And so it was easy to move in, easy to move out. These are incredibly liquid instruments because of the underlying commodity, so you can write as big a ticket as you want and put it in there. Just — as with any ETF — don’t use a market order, ever. Put in your limit, and don’t trade in the first 15 minutes of the market. Let the markets open, because everything’s electronic, and if there’s some price glitch in one component, you’re not gonna get the best price. So just sit on your hands until 9:45 East Coast time every morning when you’re trading an ETF, and don’t put a market order in.
BARRY RITHOLTZ: It’s so funny you say that. I started on a trading desk, and some of the rules us newbies had to learn were: no market orders, always limit orders — although I have a few funny stories about market orders that got executed; the MCI WorldCom deal, pretty stupid — be really careful around the open, and no trading IPOs. I mean, those were the three rules, everybody.
SAL GILBERTIE: Those are good rules.
BARRY RITHOLTZ: Those were pretty good rules. Yeah. One of the things I’ve always been fascinated with in commodities and futures — the thing that probably confuses laypeople the most: backwardation and contango. Explain what those two things are and how you manage around them.
SAL GILBERTIE: All right — so I didn’t think you were gonna bring that up, but that’s the reason we have three exposures. It’s complicated, but that mitigates backwardation and contango. In a nutshell — let’s keep this to 30 or 60 seconds — when I was working at Cargill, we called it the cost of carry. That’s contango. They both begin with a C; that’s how I remember it. But it’s the cost of carry. If you’re a grocer and you buy a can of peas and put it on a shelf until somebody buys it, you had a cost: you had to buy the can of peas, you’ve got insurance for your store, you’ve gotta pay all these other bills until it goes off the shelf. That’s a cost of carry.
BARRY RITHOLTZ: Simple inventory — you pay for it until you sell it. You laid out the cash.
SAL GILBERTIE: Absolutely. So over time, it costs you money to keep that thing on the shelf. Actually, if grocers didn’t care about consumer sentiment and just cared about market prices, they would raise the price of that can of peas once a month. They’d say, well, heck, that cost me a penny more to hold it and pay for the heating and air conditioning — and my cost of money; I could earn interest on that money or put it to better use. So the price, as you go out the futures curve, should go higher, because you have to store corn, for instance — it costs roughly about a nickel a month to store corn. So if you buy corn at $4 a bushel, at the end of a year you’d better get $4.60 for that corn if you stored it, because it cost you a nickel a month — it cost you another 60 cents to hold that corn. If you look at a futures curve, by and large that’s priced in. So cost of carry — contango — is a normal market. Prices go up slightly as you go out, just to reflect the cost of buying and holding that commodity. Remember, commodities are real things; it’s not just paper. It doesn’t matter in gold, ’cause gold’s worth so much and you just put it in a big pile, and there’s a guy with no neck and a gun guarding the pile — it doesn’t cost much. But in terms of moving corn around and sticking it in a grain silo and holding it, that’s a big deal. You’ve gotta keep the humidity right and all that.
So backwardation is when that system breaks, and that system generally breaks when you’re afraid there’s not gonna be enough corn the next month. So you buy all your corn this month. Okay, well, now you’ve broken the supply-demand economics, because as more buyers come in, the price goes higher. So if the price nearby goes higher than the price that’s further out, that’s backwardation.
BARRY RITHOLTZ: It’s not lower left to upper right — suddenly it’s upper left to lower right. That’s what the chart looks like.
SAL GILBERTIE: Correct. And backwardation is not a natural occurrence. It’s an occurrence during a disruption of some sort, be it a supply disruption or a political disruption.
BARRY RITHOLTZ: Huh — really intriguing. So of all the commodities we’ve talked about, wheat is probably the most global commodity. Not only does it go into everything from bread to pasta to whatever — it’s just such a basic food staple. How do you look at the global changes in wheat production? You mentioned Australia, obviously Russia and Ukraine, lots of parts of Europe, Argentina and South America, plus the United States and Canada. Given the global production, how do you track all the weather and all the factors driving total global production?
SAL GILBERTIE: If you’re in the business, you hire an analyst. If you’re a normal person, you look at the USDA report once a month. And if you’re everybody else, just look at the futures price — it all gets built in, because all the people doing the first two things I just said are building that into the price. So just look at the futures and you’ll see what’s out there. But yeah, really watch the weather. If it’s dry in western Canada, if it’s dry in the Dakotas or in Kansas, if it’s dry in Ukraine or Russia, if it’s dry in Australia, if it’s dry in Argentina — you’re gonna have a wheat problem.
BARRY RITHOLTZ: Huh. Really, really interesting. So obviously the price volatility is driven by changes in supply and demand, and there’s a little bit of geopolitical risk premium. We talked about tariffs and export restrictions and sanctions, and obviously war. But how do we generally think about prices of wheat? What are the key drivers that are gonna affect this going forward? Is it simply weather, or is that pretty much the only thing that’s driving it?
SAL GILBERTIE: Honestly, for wheat, it’s weather and geopolitics. And again, as we saw, you see the choke points — and the Black Sea is the primary choke point. So that’s the geopolitics part. And look, understand: even during the height of the Ukraine war and the political fallout in the first year of that, you could still buy Russian wheat. Anybody who wanted to could buy Russian wheat. Sanctions don’t go on food — you don’t do that. Even during war, nobody puts sanctions on food. You can import food from your enemy; it’s perfectly legal. But you might not get a ship to go in there because of the war premium and all that. But you can buy it — nobody’s gonna put restrictions on food. So as soon as people figured out, well, wait a minute, there’s gonna be free flow, that price came back down.
Where you have an issue is when it doesn’t rain. Because again, that pile at harvest is small. You’ve only got, on average, six months of excess supply at any given time in the world of wheat. If you have a major problem — a major crop problem, be it drought or disease in a major producing area — suddenly you have five months or four months. What if that happens two years in a row? Then you have one month or two months. That’s why the price is so responsive. And that’s why, when you see these things flatlined at the low long-term price levels, that’s when you need to look at maybe an allocation to those things.
BARRY RITHOLTZ: Huh. So WEAT, the ETF, is an unleveraged product, but obviously wheat futures trade with leverage and a lot of volatility. What sort of time horizon and risk tolerance should an investor that this is suitable for really be thinking about?
SAL GILBERTIE: Sure. Well, again, it’s a strategic allocation. So I think that if you do the math, every four to seven years there’s a drought. If you look at the charts, things flatline at certain prices, and with wheat, your breakeven is generally roughly a dollar a bushel more than corn — and that varies a little bit. But if you see corn down at four bucks, if you see wheat down approaching $5, you’re looking at — based on history — limited historical downside and pretty significant historical upside. It’s not that these things can’t move lower; they just tend not to stay there, because of the usage, and the farmers will just ship crops.
So I think that it’s a strategic allocation — it’s something that you move money into when prices are low. And it’s in the headlines when you run out of food, so it’s not gonna be lost in your portfolio, and the price will spike. You’ve got a 1% allocation of corn or wheat or whatever it is, and all of a sudden it’s 2%. When you look at your rebalance quarterly, you take some action.
BARRY RITHOLTZ: Huh. Really interesting. So to wrap up: investors looking to hedge against the cost of food inflation, against geopolitical turmoil, against exposure to other asset classes that are all fairly correlated, might want to consider commodity ETFs such as wheat. I’m Barry Ritholtz. You’ve been listening to Bloomberg’s At the Money.
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