Wheat prices at nine-year high as bakers warn of price increases

No comments

Wheat prices are expected to continue rising over the coming weeks after hitting hit nine-year highs earlier this month.

With global demand on the up, levy board AHDB said feed wheat prices reached £214.70/tonne last week, up 16.2% on the same time last year.

“Global wheat prices keep climbing each week on the back of supply concerns, and UK prices are following global trends,” said AHDB senior analyst Alice Jones, who added ex-farm bread wheat was by early November also “surpassing all previous highs”, reaching a nationwide average of £255.40/tonne, up 26.7% year on year.

“As long as global prices keep rising there is scope for domestic prices to keep rising,” Jones said.

Her comments come against a backdrop of mounting warnings that commodity price volatility is now driving food price increases, with no end in sight to these inflationary pressures.

Wheat, corn and soy hikes fuelling price inflation fears

It follows warnings by the UN’s Food and Agriculture Organization, which said world food prices hit a 10-year high in August due to a “recent surge in agricultural input prices”.

In its twice-yearly overview of global food markets, the FAO warned that the “higher prices of these inputs will inevitably translate into higher production costs, and eventually into higher food prices”.

In addition to inflated wheat prices, the bakery sector was “facing a variety of [other] cost pressures”, said Gordon Polson, CEO of the Federation of Bakers.

“Energy pricing is also on the rise, while HGV driver shortages and recruitment are resulting in increased wage rates,” he said.

Supermarkets set to face pasta shortages as sector declares ‘emergency’

Kingsmill owner Allied Bakeries said it was “exposed to inflationary pressure in relation to the cost of flour, as well as the gas we use in our ovens and fuel for our delivery fleet”.

Such cost rises were “significant in the overall cost of a loaf”, according to a spokesman for the business, who added Allied was trying to “mitigate” the impact of the increases.

But in echoes of warnings from both the dairy and poultry sectors in recent weeks, the FoB’s Polson said bakers would “inevitably” need to recover costs soon, leaving retailers to have to make the call whether “to absorb some or all of the overheads or instead, pass them onto the consumer”.