Wheat Prices Soar

Wheat prices have hit a 22-month high after a severe drought and ensuing wildfires in Russia devastated crops.

Chicago Board of Trade (CBOT) wheat for September delivery broke through the $7-a-bushel level in US trade for the first time since September 2008, before falling back to $6.93.
Prices have risen 50% since late June.
Concerns are growing that the rise will lead to an increase in prices of flour-related products such as bread and biscuits.
Gary Sharkey, head of wheat procurement at Premier Foods, which makes Hovis bread, told the Financial Times that the industry would be “unable to ignore a 50% rise in wheat prices”.
Analysts are also worried about the possible knock-on effects.
“I think it will have an effect on both food prices and food company profits,” Martin Deboo from Investec told BBC Radio 4’s Today programme.
“Experience of 2008’s round of inflation would suggest cost side increases from wheat do get passed on to the consumer eventually,” he added.
“Generally the wheat content of a loaf of bread is probably about 12-15p a loaf. So if this wheat cost increase has to be passed on then we’re talking about 5p on a loaf of bread.”
He added that the price of other food products could also go up.
“Animals are fed on wheat or wheat derivatives and therefore this will feed through indirectly into meat and poultry prices, so this will have a significant effect on food price inflation generally.”