One of the most important food ingredients – wheat – has hit its highest price in 14 years.
The reasons for the price spike are a combination of the difficulties farmers are experiencing with weather conditions that are on the extreme end – blizzards, floods, winter storms and high winds – which have hit North and South Dakota, impacting crops and reducing wheat yields.
Zerohedge reported that spring wheat has reached $12.31 per bushel, the highest since 2008, caused in large part by the delayed planting as the United States and Canada had wet conditions that were usually out of the norm.
“The spring wheat crop should continue to see planting delays, with heavy rains and cold weather in the forecast,” said commodity research firm The Hightower Report.
Meanwhile, Western Europe has been dealing with droughts for the past three weeks, and this is set to make crop yields even worse. French weather forecaster Meteo France said that France will be hit soon with a “summer-like heat.”
French commodities Agritel said that despite crop yields in France looking like they are in decent shape, the droughts will still have an impact on the crop ratings.
“The growing water deficit in France is causing concern amidst an already tense market,” it stated in a commodity note. “The situation is clearly stretched in terms of availability [of wheat] on the international scene.”
According to ZeroHedge, the current war in Ukraine is also contributing to the prices increasing, the capital city of Kyiv alone producing 10 percent of the entire world’s wheat exports.
Ukraine is having a challenging time exporting goods, however, and ZeroHedge reported that an official from the United Nations’ Food and Agriculture Organization (FAO), had said seaports, such as that in Mariupol and infrastructure challenges, were making it impossible to export wheat.
During a virtual press briefing on May 6, FAO Markets and Trade Division Deputy Director Josef Schmidhuber said, “It’s almost a grotesque situation we see at the moment in Ukraine with nearly 25 million tons of grain that could be exported, but that cannot leave the country simply because of lack of infrastructure [and] the blockade of the ports.”
Schmidhuber added that the full grain silos in Ukraine could lead to shortages in storage for the next harvest coming in July and August.
“Despite the war, the harvest conditions do not look that dire. That could really mean there’s not enough storage capacity in Ukraine, particularly if there is no wheat corridor opening for export.”
The World Trade Organization (WTO) Director-General Ngozi Okonjo-Iwealah had similar comments regarding spiraling food prices, to which she expressed serious worry.
“It would really help the world if we could evacuate this grain [from Ukraine]. There is a serious risk of food prices going up and spiraling out of affordability that could lead to more hunger,” Okonjo-Iweala said.