Wheat prices have surged from the U.S. to Russia, hitting a record in Europe and raising bread costs all over the world. And there may not be much relief soon, according to Bloomberg.
The crop was hit by droughts, frost and heavy rain this year in key exporters. That’s curbed supplies used in everything from pizza crusts and French baguettes to Asian noodles and African couscous, pushing benchmark prices in Chicago to an almost nine-year high.
That’s not just threatening higher grocery bills — it’s giving central banks a bigger inflation headache and risks worsening global hunger that’s already at a multiyear high. The worry is that big crops looming in Argentina and Australia won’t fully ease tight supply, and fields elsewhere are only just being planted.
“We could see further upside,” said Carlos Mera, head of agricultural commodities market research at Rabobank in London. “The higher the price goes, the more fear there is in the market and the more panic buying.”
Inventories in the top seven exporters are expected to sink to an eight-year low.
Russia, last season’s top shipper, started taxing exports this year to safeguard supplies and keep domestic costs in check, and signaled an overseas sales quota is likely.
Appetite from importers remains strong, with Saudi Arabia booking more than double the expected amount in its latest tender. Countries typically stockpile several months of supply, but governments can’t risk running out before the next major harvests.
While wheat’s rally is good news for farmers, their costs are going up too. Fertilizer prices are soaring from Europe to North America on production shortages, threatening to weigh on harvests next season.