Sylvia Macdonald

Rank Hovis is to increase the price of flour by £89.37 per tonne, effective 6 September, Lawrence Watson, head of sales and marketing, revealed exclusively to British Baker earlier this week.

He said: "There has been a 70% year-on-year rise in raw material costs. This has been driven by the prediction of a 20 million tonnes drop in the global harvest, which has impac-ted heavily on world prices."

He added: "Over the summer, extreme drought conditions have cut the Russian crop by 25% and led to a Russian decision not to export wheat. Canada has also lost 30% of its crop in floods and yields are down across France and Germany. It is still too early to predict the UK harvest, but yields look like being 10-15% down following results from the the first 10 days of harvesting."

The UK’s other major supplier, ADM Milling, is also blaming climactic forces for the major impact on prices. Tim Cook, MD of ADM Milling, told British Baker: "The significant increase in wheat prices is of great concern to both ourselves and our customers. Over recent years, we have all come to recognise that the price of UK wheat is subject to influences that go beyond our shores and the size and quality of our domestic crop. We will continue to monitor the situation."

According to ADM, excess rainfall in Canada during the planting period left a significant number of acres unplanted. Russia’s ban removes a source of Black Sea wheat from the market, which has been the most competitively priced wheat in Europe over the last few seasons. Lower wheat production this year in the EU and early indications of dryness concerns in Australia, will also continue to influence the wheat market over the next few months.

As a result, there has been speculation from fund money over the last five weeks, which has contributed to current price volatility.

A spokesman for ADM added that although wheat prices have significantly increased, the market was not in the same position as it was in 2007/08, when global wheat stocks were very low, as there have been two seasons of stock replenishment.