Global Wheat Supplies Are Falling, Meaning Higher Prices For Consumers
Unlike soy or corn, which are primarily fed to animals, fluctuations in wheat supplies affect consumers at a much higher level. As widespread drought continues, crop losses in two of the world’s top wheat producers - Canada and Russia - and a smaller crop expected for the U.S., are driving prices to multi-year highs.
Wheat is planted on more acreage on a global scale than any other crop. And these losses are expected to only be partially offset in regions where there are production gains, creating impacts that will be felt in the majority of the world’s households and governments through higher prices for everything from bread, to pastas, noodles, and breakfast cereals.
Commodity fluctuations take time to trickle down, and retail prices are often affected by subsidies etc. However, higher grain costs now indicate that prices could stay elevated until early 2022 with the next harvest for the Southern Hemisphere.
Russia has been the world’s top exporter for a number of years, but its smaller crop and the government’s efforts to mitigate rising domestic food prices through taxing export cargoes has made buyers shift to the EU and Ukraine. And while the EU crop is bigger this year, rains in Germany and France have impeded the harvest and hurt quality.