Global wheat prices surged in recent months, fueled mainly by droughts and poor harvests, signaling higher food prices in the near future.
Droughts in the Northern Hemisphere amid growing demand, reduced supply and high costs for farming products contributed to the spike in wheat prices, The Wall Street Journal reported.
Future prices for a variety of wheat products hit their highest since 2008 this week, according to the Minneapolis Grain Exchange.
High-quality, hard-red spring wheat, used for baking and cooking, hit $10.44 a bushel, doubling in price compared to the last two harvest seasons, according to the Grain Exchange.
Global food costs jumped last month, extending a march toward a record high. https://t.co/1l3ZoDKonj
— Lisa Abramowicz (@lisaabramowicz1) November 4, 2021
Lower-quality and more commonly grown wheat has also surged in price, according to the WSJ. Prices for soft-red wheat used to feed animals and in processed foods increased 28% compared to this time last year.
Further price increases are likely, Carsten Fritsch, a commodities analyst at Commerzbank AG, told the WSJ. Importers like Japan, Egypt and Saudi Arabia have ramped up purchases while worsened growing conditions reduced global inventory for exporters like the U.S., Canada and Russia.
“There’s no sign yet that high prices are deterring buying,” Fritsch said.
The U.S. has experienced growing food inflation, causing companies to increase prices to offset high production costs. (RELATED: U.S. Consumer Spending Grew Slowly In September)
Mondelez, the company behind Oreo cookies, Ritz crackers and Sour Patch Kids, will increase prices by up to 7% in 2022 to offset growing costs for ingredients, transportation, rising wages and growing demand.
Food giant General Mills, producer of Cheerios cereal, announced sweeping price increases to combat the growing cost of ingredients, labor, and transportation, the WSJ reported.
“Our prices are going to go up for the remainder of the year as we see inflation going up,” General Mills chief executive Jeff Harmening said during the company’s earnings call in September.
Other major food companies like Kraft Heinz, Conagra Brands and Nestle have announced additional price increases to offset high production costs.
Global food prices rose for the third straight month in October, according to the Food and Agriculture Organization of the United Nation’s food price index. The index, which tracks international food prices of globally traded commodities, grew 3% in October and over 31% year-over-year.
U.S. consumer spending at grocery stores was 4% higher in August than the same month one year prior, and food prices increased 1.2% in September.
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