Serious Dough

Higher Wheat Prices Drive Up Bills for Grocery Staples

First it was corn. Now wheat is getting the blame.

Earlier this year, corn began getting pricey because it was in high demand to make ethanol. That sent prices rising for other corn-dependent products, including milk and meat. Now wheat is costing more and more because of poor harvests and greater global demand, sending grocery bills still higher.
The price of wheat futures reached a record $9 a bushel on the Chicago Board of Trade on Wednesday. And the higher food prices that have resulted from the increase — items like baguettes, rigatoni and cupcakes cost more — come at a time when consumers are already feeling strained by energy prices and mortgage debt.

Although wheat doesn’t touch as many foods as corn, which is used in products as varied as livestock feed and high-fructose corn syrup, its price directly affects staples such as cereal and bread.

[…]

Ethanol, a fuel that can be derived from corn products, set some of the rising grocery prices in motion. Demand for ethanol caused a worldwide shortage of corn this year, sending prices for futures of the crop on the Chicago Board of Trade above $4 a bushel last June, compared with about $2.50 two years ago. As farmers scrambled to grow more corn, crops such as wheat and soybeans were replaced, reducing their supply, according to Michael Swanson, a Wells Fargo agricultural economist.

Droughts and poor weather that hurt crops in Australia and the Midwestern United States pushed prices for the corn sharply higher as demand increased from importers in North Africa and Europe. The Agriculture Department said this week that it raised its projections for wheat exports.

The Washington Post