The price of wheat for bread-making flour in the US has "exploded" over the past two weeks shooting up 66%, according to Alex Waugh, director general of the National Association of British and Irish Millers (nabim).
He told British Baker that on Monday 25 February the price of quality wheat in the US went up 23% in a single day on the Minneapolis Grain Exchange. "This is extraordinary," said Waugh. "The industry is looking on in amazement."
He said that the industry has yet to see if this will affect the price of wheat in the UK, but millers and bakers that import wheat from North America will be feeling the pressure.
Martin Deboo of Investec told British Baker that Warburtons in particular might eventually suffer from higher wheat prices, as it imports a lot of its wheat from North America.
"The world is desperately short of quality wheat," added Waugh. "This is because of poor harvests, demand for biofuels and bad weather around the world."
The price spike on Monday followed an announcement by Kazakhstan’s Agriculture Ministry, which said that it would slow grain exports by imposing export customs duties. Kazakhstan is one of the largest grain exporters in the world and has already sold 75% of its wheat.
As the price of commodities rocket, market analysts predict that UK bakery companies will feel the pressure from rising commodity prices.
Premier Foods, the maker of Hovis bread, saw its share price fall to a record low of 85.75p on Tuesday. This followed an announcement made by Panmure Gordon business analysts. It told British Baker on Tuesday morning that it had changed its stance on Premier’s shares from ’buy’ to ’hold’.