Bread prices
set to rise after bad weather hits UK wheat crop. The Department for the
Environment, Food and Rural Affairs said millers were expected to import 2m tonnes
of mostly German wheat to make up for a 13% shortfall in the home-grown crop. It
will be the biggest wheat import since 1980, and is expected to lead to a
substantial increase in the price of bread next year.
The price of
bread-quality wheat for delivery rose by £5.50 a tonne last week to £261.50 a
tonne, according to the Home Grown Cereals Authority (HGCA), a trade body.The cost of
basic feed wheat on the futures market rose to a record high of £227 a tonne, a
45% increase since January. Global wheat prices are also at near-record highs.
Glencore, the
global commodities trader, which controls about 8% of the global wheat trade,
is expected to be a big beneficiary of the price rise. This year the boss of
its food trading business said the worst drought to hit the US since the 1930s
would be ‘good for Glencore’.
Chris Mahoney,
head of Glencore's agricultural division, told investors this summer. "High
prices, lots of volatility, a lot of dislocation, tightness, a lot of arbitrage
opportunities (exploiting price differences in different markets). In terms of
the outlook for the balance of the year, the environment is a good one.”
Thanks for the reassurance Chris and
perhaps it is good for Glencore investors but probably not so good for the rest of us – no
wonder they call money by the old euphemism ‘dough’.