A GOLDEN MARKET INDICATOR
BY NEIL TOWNSEND
The relative value of gold to other commodities, including wheat, is at an all-time high. For example, one ounce of gold was worth almost 72 barrels of oil at the end of November 2025, up from 7.4 barrels in the same month of 2020. Over the same period, an ounce of gold went from being worth about 100 bushels of wheat to 750. What does this inverse relationship indicate?
THE GOOD
Demand generates little sizzle in wheat markets. Call an international wheat trader and you will likely be told demand is ordinary at best. Canada has bucked this trend and seen strong export demand over the last several years. 2024/25 was a strong export year, with non-durum wheat exports at 23.4 million tonnes. In 2025/26, exports are forecast by Agriculture and Agri-food Canada at 22.5 million tonnes. However, exports through the end of November 2025 were already up 13 per cent over the previous year, or almost 800,000 tonnes.
This is a credit to Canadian line companies and the unique nature of Canadian spring wheat. Line companies are motivated to use their investment in logistical infrastructure. They can break even or better, regardless of the value of wheat by charging fees for movement, cleaning and storage.
Additionally, Canadian spring wheat offers end-users higher protein, superior baking attributes and excellent blending opportunities. Thus, in otherwise sluggish demand periods, spring wheat continues to move. These factors indicate demand will likely not drop in 2026.
THE BAD
World wheat production has not experienced significant problems in several years. The EU had some issues with quality in 2024/25, but by volume there is no shortage. Perhaps the biggest surprise is the ongoing war in Ukraine has not proven more disruptive to Black Sea wheat supplies. This is a testament to the resilience of Ukrainian farmers.
Global demand has been solid but has not provided much growth. A market that does not have supply issues needs incremental growth. For wheat, this could be less to do with overall demand and more to do with import volumes that have been relatively steady for the Big 8 wheat exporters.
It is unlikely that a demand surge will occur and subsequently tighten world wheat fundamentals and increase prices. India, expected to provide some incremental wheat import demand, did not meaningfully enter the market. A more likely assist would be poor weather in a key production area that reduces overall supply. Of course, this may or may not occur.
THE UGLY
Wheat prices do not operate in isolation but are influenced by broader grain and oilseed markets. Successful corn and soybean production has weighed on prices. Just like wheat, the corn and soybean markets would benefit from a significant production issue in a key producing area to push prices in a sustained upward trajectory.
The political realm remains the most significant headwind. Trade patterns have been impacted by tariffs and politics. There is no way to predict whether trade disputes will ebb or flow in 2026. Vladimir Putin, Donald Trump and Xi Jinping will continue to lead their respective countries, and global trade will not necessarily tilt toward harmony.
This is where gold can tell us about market expectations. Its record price may suggest strong demand because more people have access to retail gold—you can buy it at Costco. More likely, it tells us people, institutions and governments are nervous about political and trade instability and fiat currency values. They want a hedge against this uncertainty. If stability prevails, gold prices will drop to a more historical relationship with other commodities such as crude oil and wheat.
Neil Townsend is chief market analyst with FarmLink Marketing Solutions.
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