Cost relief for bakers as bread-making wheat price dips

Wheat​

Prices last week of €180 a ton for bread-making wheat represent a considerable fall from the €248 a ton recorded this time last year.

And while the wheat commodity market showed much volatility over the past twelve months, sending prices soaring for key wheat sourced ingredients such as starch and flour, relative stability could be in sight.

"In response to the higher prices for wheat last year, globally farmers planted more wheat crops. In addition, the weather conditions were favourable, and consequently yields are stronger,"​ an economist at the UK-based Home Grown Cereals Authority explains to BakeryandSnacks.com.

This is a healthy mix of factors, which resulted in a downwards movement in price for wheat over the last two months. And giving ground for further, albeit slightly reticent, optimism for flour and other wheat-based ingredients, global wheat stocks are on the up.

Last year, wheat stocks hit a 30 year low, creating a bulliish market on fears that buffer stocks were far from sufficient to meet global demand. But this year, "wheat stocks are expected to built by about 140 million tonnes,"​ added the HGCA spokesperson.

Corn​

By contrast, costs to the food and beverage industries for corn-based ingredients remain high, setting a picture unlikely to change anytime soon.

Prices for corn, an incredibly versatile cereal that delivers cooking oil, high fructose corn syrup, starch, even grain alcohol for bourbon whiskey, have doubled in price between 2007 and 2008.

And prices, driven by the US crop, from the Chicago Board of Trade this morning show corn trading at $210 a ton. This compares to about $100 a ton last year.

While observers expect the second highest corn crop on record - about 310m tonnes - indeed, a better than expected figure, soy is still competing for land increasingly used for maize growing, and recent flooding in Iowa, North America's top producing corn state, have added support to the prices.

Corn is also at the centre of the current biofuels versus food debate that sees crops for human consumption, and for animal feed, competing with maize dedicated to biofuels. A tug-of-war that has, arguably, contributed to the higher prices for corn derived ingredients.

Soy​

Turning to soy, derivatives of which, such as oil and protein, are increasingly used by the food industry, prices are again on the up. Last year, record plantings of corn, resulted in about 5 million hectares lost from soy to corn, according to the HGCA economist, who added that competition for land is a key a driver in the price movement for soy.

The current soybean crop is approaching harvest - about six weeks away - and "it looks quite good",​ affirms the spokesperson for the cereals authority.

But this morning, prices showed $440 a ton. A steep rise from the, already considerable, $330 a ton posted last year for soy.