Heatwaves and biofuel demand in Europe and US to fuel bread, pasta, beer prices

The combination of heatwaves in Europe and the US, low global grain stocks and an increase in production of biofuels has seen wheat prices rise to 10-year highs and may lead to big increases in the cost of bread and pasta.

Corn and barley prices are also likely to rise, which may push up the cost of beer and breakfast cereals.

The US Agriculture Department has reported that growing conditions for the US spring wheat crop were the worst in 18 years because there was not enough moisture to germinate seeds. A sharp rise in requirements for biofuel is forecast in the next two years as ethanol plants open across Europe and production is ramped-up in the US. Global wheat demand is expected to exceed production this season for the fifth time in six years.

Finfacts