With the winter wheat harvest winding down and the spring wheat harvest rapidly gaining momentum, hopes for an 11th hour increase in hard winter protein or spring wheat production have evaporated. Wheat production in 2017 is significantly smaller than last year, and supplies of high quality wheat with protein will be tight. For bakers, the supply situation creates real challenges.
In particular, bakery flour prices currently are running 20% to 50% higher than those prevailing at the beginning of August 2016. Not since 2014 have prices for basic bread flour averaged levels at which flour prices have been quoted most recently. Similarly, spring standard prices haven’t held at current levels since 2011. Other ingredient prices have been trending higher as well. The overall pan bread ingredient index, as compiled by Milling & Baking News, is up about 16% from last year while the bagel ingredient index (more heavily reliant on spring wheat) is up 38%.
Toward what range bakery flour prices will gravitate over the 2017-18 crop year remains unclear, as demonstrated by wide swings last week in both wheat futures and the cash premiums. Still, there is no escaping the reality that ingredient prices will be significantly higher this year than was the case the last two. Government data indicate scant movement in average retail prices for bread and other baked foods over the past year. Bakers must recognize that ingredient market conditions leave such flat pricing untenable going forward.
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