Higher prices for all wheat products

The wheat futures have risen to their highest level in the last two years, so there is a big chance that one would pay more for a loaf of bread at the local grocery store.

The wheat price has risen more than 80 percent compared to the seven month low in June and it continues to go high reaching their highest level since August 2008 when the Russian said that they would stop the exports until the 1^st of December because a long drought destroyed about a quarter of their wheat crop. Darin Newsom, a senior analyst at Telvent DTN, an agriculture and commodities information company says that if the prices continue to rise, the Americans might be in the position pf paying 25 percent more for a loaf of bread. And bread is not the only product that will be more expensive by the end of August or early September; all products that are made out of wheat will be in the same situation, so U.S. citizens will probably pay 10 percent more for a pizza and sandwiches, too. In cash, this means about 90 cents more for loaf of bread that now costs 3 dollars and 1.40 dollars more for a pizza that now costs 14 dollars. Newsom said that probably everything that can be bought from stores or restaurants will be more expensive then it is now.

Mark Schultz, a chief analyst at Northstar Commodity, says that even though the price has gone up in the futures market, a price increase would only be justified if the price will stay at this level or goes higher for a period of more than 20 or 30 days. On the long run, if the drought in Russia does not end the prices will certainly go higher on the retail market. Robb MacKie, a spokesman for the American Bakers Association, says if wheat prices remain at this level, the Americans will have to pay more for the rolls and the pastries, too because wheat is the most important ingredient for bakers, so it is the main cost, too. Russia is one of the world’s largest grain exporters, so the wheat shortage from this country has increased a lot the demand for the grain, and the experts are worried that other areas of the world might be the next to be affected by the excessive draught. The drought in Russia is the most important factor in the rise of the prices, but there has already been pointed out problems in Canada, where crops are going to be smaller this year, and Australia, where the crops are going to be smaller too; so many parts of the world are going to suffer from prices rising high. The United Nations’ Food and Agriculture Organization said that its global wheat production is going to be 4 percent lower in 2010 than it was expected, that means that the crop will be about 651 million metric tons, compared to the forecast at the beginning of the year, which was about 676 million metric tons. This is enough for the United States to be on the safe side, but if global demand for the grain continues to increase they might be forced to ship wheat to other countries.