Wheat prices soar: How will that affect the grocery bill?
Wheat prices have jumped about 75 percent since early July. Drought in Russia and, perhaps, speculators in the commodity markets are behind the increase.
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“We have been rapidly trying to get the Commodity Futures Trading Commission to put some limits on these index funds,” says Mr. MacKie. “All we have gotten is a few slices of the loaf, in that now they have to be more transparent.”Skip to next paragraph
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Until early July, MacKie was expecting wheat prices to behave, perhaps even to fall. Inventories of wheat are at a 23-year high. US farmers have been increasing their acreage devoted to wheat. But now, he says, the tide has turned. “The agricultural economists we rely on so our members know when to buy are all saying this is 2008 all over again.”
When commodity futures rise, consumers usually don't see an increase in prices on the shelves right away. But MacKie says the surprise price jump for wheat may mean the impact is felt sooner rather than later.
So far, some bakers say they haven’t noticed a difference. Abe Faber of Clear Flour Bakery in Brookline, Mass., says he is paying the same price for a 50-pound bag of high-quality flour that he has been all year. Moreover, he notes, flour represents only about 12 to 14 percent of the cost of a loaf of his bread.
“If it doubles, that could add to the cost,” he says, “Now, we’ll keep an eye on this.”
In poorer parts of the world, however, the rising price of the grain could affect a large number of people, says Thom Leonard, a milling and baking consultant in Lawrence, Kan. “For people whose staple is flour, grain, or simple breads, their food budget may be already 80 percent of their income,” he says. “For poor people around the world, this rise in the price of wheat is a real issue.”
Some farmers in the US and Canada will likely benefit from the higher prices if they have not already sold their wheat, says Mr. Lapp, the economist. If the price stays high, he says, “I would expect some supply response in the next 6 to 12 months.”