Continued Australian floods could affect bread prices

Australian wheat growers will be unable to deliver their harvests due to the devastation caused by sustained flooding; as a result of this revelation, the price of wheat for March delivery at the Chicago Board of Trade rose to $8.25 (£5.30) a bushel on 3rd January, its highest level since last August.

Australia is the world’s fourth largest exporter of wheat; the floods that have impacted the country’s wheat yield cover an area the size of France and Germany and are expected to reach a depth of over 9m in some parts of Queensland in the next few days.  

The costs to growers in Victoria, New South Wales and Queensland have been estimated to be between $1bn (£660m) and $2bn in lost revenue and have blighted the nation’s largest crop for eight years.

Wayne Gordon, a grains analyst at Rabobank in Sydney, has said he expects 30 to 40 percent of Australia’s grain harvest will be downgraded to below milling wheat, compared with only 5 to 10 percent in a normal season.

Gordon Polson, a director of the UK Federation of Bakers, said that although ‘spot’ prices are not what large bakers pay for their supply, they will not remain unaffected and the price increases in wheat could lead to a rise in the price of bread.

Mr Polson explained, "There is no doubt that if there is a longer trend of higher wheat pri

Continued Australian floods could affect bread prices

Australian wheat growers will be unable to deliver their harvests due to the devastation caused by sustained flooding; as a result of this revelation, the price of wheat for March delivery at the Chicago Board of Trade rose to $8.25 (£5.30) a bushel on 3rd January, its highest level since last August.

Australia is the world’s fourth largest exporter of wheat; the floods that have impacted the country’s wheat yield cover an area the size of France and Germany and are expected to reach a depth of over 9m in some parts of Queensland in the next few days.  

The costs to growers in Victoria, New South Wales and Queensland have been estimated to be between $1bn (£660m) and $2bn in lost revenue and have blighted the nation’s largest crop for eight years.

Wayne Gordon, a grains analyst at Rabobank in Sydney, has said he expects 30 to 40 percent of Australia’s grain harvest will be downgraded to below milling wheat, compared with only 5 to 10 percent in a normal season.

Gordon Polson, a director of the UK Federation of Bakers, said that although ‘spot’ prices are not what large bakers pay for their supply, they will not remain unaffected and the price increases in wheat could lead to a rise in the price of bread.

Mr Polson explained, "There is no doubt that if there is a longer trend of higher wheat prices, this will be reflected in [bakers'] costs. If there are a couple of poor harvests in the world, that will obviously impact prices."

Although the floods’ impact on global wheat prices will be less pronounced than it would have been a decade ago due to increasing Russian dominance in the wheat market, warnings of a harsh winter in the USA may mean a worldwide shortage of milling wheat.

This in conjunction with dry weather in Argentina means further wheat shortages will only result in a continued rise in price.

ces, this will be reflected in [bakers'] costs. If there are a couple of poor harvests in the world, that will obviously impact prices."

Although the floods’ impact on global wheat prices will be less pronounced than it would have been a decade ago due to increasing Russian dominance in the wheat market, warnings of a harsh winter in the USA may mean a worldwide shortage of milling wheat.

This in conjunction with dry weather in Argentina means further wheat shortages will only result in a continued rise in price.