Grain prices are falling again, but bread remains expensive

NOS Newstoday, 10:39Amended today, 10:56

After the start of the war in Ukraine, wheat quickly became more expensive, but recently the price has fallen again. Now 1000 kilos of wheat costs about 320 euros, during the peak in May the grain was about 120 euros more expensive.

Although the grain price is not yet at pre-war level, are you already noticing the drop in prices in the store when buying bread and other grain products?

Until the end of last year, a wheat price of 150 to 200 euros per tonne was common. But in January and February of this year, the price rose to 290 euros and, since the summer, wheat has cost between 315 and 350 euros per ton.

Prices skyrocketed after the Russian invasion of Ukraine in late February. As a result, it was no longer possible to ship large shipments of wheat from Ukraine, a global grain exporter.

grain accord

“But even before the war, the grain price had already risen due to Covid-19,” says Jan Willem Baas, chairman of the Committee of Grain Traders. Before the pandemic, the price was about 170 euros per tonne.

Since the grain agreement concluded in July between Ukraine, Russia and the United Nations, grain is again exported from Ukraine. As a result, the price has dropped somewhat.

According to Thijs Geijer, economist of food and agriculture at ING, the price decrease is also related to favorable harvest expectations in North America and Russia and the expectation that global demand will decrease slightly.

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The increased raw material price is passed on to the customer by bakers and supermarkets. But according to Geijer it is unlikely that bread will become slightly cheaper again: “Of course the price of wheat is important for the baker, but in the meantime energy and labor costs continue to rise. The drop in grain prices does not compensate for that.”

The higher labor costs are related to the staff shortage in the bakery sector, which makes the companies compete with the hourly rate, but also with the minimum wage that is going up and with high inflation that could lead to new wage demands in next year’s collective bargaining.

Even more expensive

“Bread is certainly not getting cheaper,” says director Wim Kannegieter of the Dutch Bakery Association, the trade association for bakeries that supply (supermarket) chains.

“It will probably even become more expensive. Energy costs have sometimes increased tenfold, bakeries are fighting for sufficient staff and even packaging has become more expensive due to the high oil price. In addition, transport is also more expensive due to the increased fuel prices.”

“We also notice that manufacturers and flour mills are entering into shorter contracts when purchasing grain,” says Jan Willem Baas of the Committee of Grain Traders. “They are cautious and don’t want to pay these high prices for too long.”

ING economist Geijer emphasizes that bread is a basic product, which means that the price of ordinary whole-wheat or white bread will rise relatively less sharply: “We pay attention to the price of bread when we go to the supermarket. A supermarket therefore does not make bread more expensive quickly.” , he explains.

Uncertainty around grain deal

There is therefore no prospect of a fall in the price of bread for the time being. “The past shows that groceries quickly become more expensive in these kinds of situations, but not cheaper again with windfalls,” says Geijer.

Moreover, there is still quite a bit of uncertainty surrounding the grain deal, according to Jan Willem Baas: “A few days ago, Russian President Putin said he wanted to revise the deal, because he would be abused by the West. The market responds best to such messages. fiercely.”

The article is in Dutch

Tags: Grain prices falling bread remains expensive

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