US drought threat to bread price

The cost of a loaf of bread is expected to rise after stifling droughts in the United States farm belt caused wheat prices to rocket.

Droughts which have devastated maize crops in the US have caused a dramatic increase in demand for wheat, with prices rising by a third in just one month in both London and Paris, the Grocer magazine said.

Consumers have now been warned bakers will be forced to increase the price of a loaf to cover their increased supply costs.

Michael Clarke, CEO of Hovis baker Premier Foods, said: "The sheer magnitude of the wheat price increases means that we will have to pass them on."

Bread makers have braced themselves for a possible repeat of 2010, when failed harvests and export bans sent grain prices soaring, the Grocer said.

There have already been sharp price increases for domestic milling wheat suitable for bread making. The UK milling wheat price shot up by 40%, to £246 per tonne, in a month.

The feed wheat price has also risen by 28%, to £192 per tonne.

Another risk factor is a potential export ban on wheat from Russia and the ex-Soviet states, the Grocer reported. Russia inflated world wheat prices two years ago by implementing an export ban because of a poor projected harvest, it said. And speculation was rising this week that a ban could return this year, the magazine added.

Meanwhile, Hovis faces further concerns as the company is committed to using only British wheat, which has been hit by the recent wet weather, while rivals Warburtons use Canadian wheat, which has been less affected.

Alex Waugh, director general of the National Association of British and Irish Millers, said: "There are real concerns about the UK crop."