The price of wheat has jumped by 50% since June – the most dramatic rise since 1973. In Europe, the price of a tonne of the grains has leapt to €211 (£175). In Chicago, traders are up to the heady heights of $7.11 a bushel for September wheat prices. (Chicago pork bellies are also going bananas but that’s another story). So who or what is behind the wheat inflation? None other than the perfidious Russians, although it has to be admitted – it’s hardly their fault. The heat wave, which has been roasting the populations of Russia, Ukraine and Kazakhstan, has created the worst drought in more than a century. The Russians may well wind up net importers of wheat as their crops wither through lack of water.
All we need now, you might fear, is some smart guy commodity speculator like Choc Finger to move in, ramp up the market and make things even worse. Well, there’s a certain amount of evidence this may already be occurring. This is because the global economy is still weak and so on the demand side not as much wheat is being consumed anyway. Humans are still scoffing bread - although with Ramadan approaching that will decrease temporarily - but animals aren’t: consumption is still down by the animal feeding industry. On the supply side, wheat inventories are in much better shape after very good crops over the past two years. So why not use the dog days of August to put out a rumour that we’re all going to be missing out on our daily bread to give the market a fright and drive up prices? Who knows - it may even wind up on the Today programme. Which it did.
The average price of a loaf in the UK is around £1.50 but a relatively small part of this is the cost of wheat. If the worst comes to the worst this may rise by around five pence. That’s if the supermarkets allow it which, knowing them, they won’t. Meanwhile, all those bourgeois foodies who prefer bread of an expensive, designer variety like fennel and olive ciabatta or Pumpernickel with whole Rye berries need not lose any sleep over this matter. Yet.
In today's bulletin:
Even Northern Rock is seeing loan book improve
'It's the deficit, stupid', Cameron and Clegg tell ministers
A bushel and a peck: wheat prices rise by half
The Milkybars could be on you as Nestle taps nostalgia vote
Editor's blog: The not-so-green green grass of home