Bread prices set to rise after a surge in the cost of wheat

Millions of Aussie could soon be paying more for a loaf of bread. 

The price of the everyday staple is projected to rise in the coming months as production of Australian wheat slows down. The Daily Telegraph reports that Australian wheat prices are poised to jump ahead as the prices of futures contracts (a deal to buy or sell something at an agreed price, but on a future date) for wheat on the east coast increased by 24 per cent over the past six months.

Dairy Australia says it’s likely that there will be a drop in EU and Aussie wheat production this year and this has also added to market speculation about a tightening in stocks and a rise in global wheat and other grain values this year.

Australian wheat prices currently sit at around $275 a tonne for old crop and forward contracts for the 2018-19 crop are at about $290/t, having lifted in line with a rise over the past month on world markets, Goondiwindi Argus reports.

So why are wheat futures going up? According to reports, Australia’s winter growing season is already off to a “poor start” and farmers are blaming the dry weather.

The Bureau of Meteorology reckons there is a 50 per cent chance of an El Nino weather pattern (warm and dry) forming that could heap further pressure on our farmers. 

And many Aussie households will likely feel the price spike heavily — according to Roy Morgan research (a market research company), 11 million Australians buy bread every week. Nearly 8.9 million purchased bread at least once a week from a supermarket, 2.8 million made their purchase from a specialist bakery/bread shop such as Baker’s Delight, and 920,000 bought bread from a milk bar, convenience store or delicatessen.

A Coles spokesperson did not directly address Starts at 60’s request for comment on whether the supermarket would increase the cost of bread in line with wheat prices, but said the grocer continues to sell affordable loaves to customers around the country.  

What are your thoughts on this? Do you purchase bread often?