Wheat Prices and our Bread

Everybody loves bread, me especially. You don’t get on Weight Watchers mailing list by not having strong bread cravings. To make bread we need grain, and the war in Ukraine is affecting grain prices which will eventually affect our food prices.

Ukraine is the Kansas of Europe. They’re a huge supplier of wheat and corn. So, when their country is threatened grain prices are impacted. Wheat futures have risen dramatically. In just the first week of the war, wheat prices have soared about 20% and since the beginning of the year prices for wheat are 40% higher.

We haven’t seen these high grain prices affect us in the grocery store yet, but it will eventually make its way downstream to us. Anytime wheat prices go up, anything we buy that has wheat in it will go up too. Think bread, flour, and cereal.

Russia and Ukraine are both major grain exporters. Russia is the number one wheat exporter and Ukraine is in the top four wheat exporting countries, according to JPMorgan. Nearly, 17% of the world’s international wheat trade comes from Russia and 12% comes from Ukraine, according to Bank of America.

Consumer prices will be affected globally but more so on the countries that primarily get their grain from Russia and Ukraine. A lot of their wheat is bought by North African countries. As an example, Egypt is the world’s largest wheat importer, and it gets nearly 80% of its wheat from Ukraine and Russia. I expect cheap bread will be hard to come by for people living in North Africa and to a lesser extent, everywhere else.

The severity of the prices is yet to be determined. It really depends on how long this war lasts. If the war in Ukraine lasts into Spring and keeps the Ukrainian farmers from planting spring wheat, corn, and other things. If the war lasts long enough, they could even see a year without any crops.

Most American brands import very little foreign ingredients, only about 8%, and most of that from Mexico and Canada, according to the Consumer Brands Association. Even though US companies don’t have a lot of direct exposure to Ukraine our prices will go up as US wheat starts getting bought to fill the gap overseas. Pricing pressure will be affected around the world.

My office is across the street from a Panera Bread so I end up eating there a lot. I’m always so tempted by those beautiful loaves of bread behind the counter when I’m standing in line. As a bread lover, I doubt a little higher price is going to alter my bread addiction. Hopefully, this war ends soon, and the “Kansas” of Europe can get their crops planted.

I’m praying for the end of this war and the Ukrainian people.

Have a blessed week!

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Securities and advisory services offered through LPL Financial, a registered investment advisor, Member FINRA/SIPC.

Securities offered through LPL Financial, member FINRA/SIPC. Investment advice offered through Independent Advisor Alliance (IAA), a registered investment advisor.

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