Got any spare dough? You’ll be kneading it
HOSTING a barbecue or taking the family out for a picnic this weekend? You might want to stock up on bread while the going is good.
The cost of the staple is likely soon to spike, markets are indicating, amid expectations Australian farmers will produce less wheat this year.
For wheat on the east coast, prices for “futures” — contracts to exchange goods for an agreed sum on a future date — have leapt almost a quarter over the past six months,
Futures markets can serve as barometers for where prices are going, in this case suggesting wheat is on a march.
Dry weather has buffeted much of Australia’s prime wheat-growing land in a development likely to put yields — the amount of wheat produced from a crop — under pressure.
Australia’s winter growing season is already off to a poor start, and the longer-term outlook is little better, analysts say.
The Bureau of Meteorology says there is a 50 per cent chance of an El Nino weather pattern forming that could heap further pressure on our farmers.
National Australia Bank analysts this week cut their forecast for Australia’s wheat output from the winter crop to “a shade under” 20 million tonnes.
Just a month earlier, the bank was forecasting 21.3 million tonnes.
Last month, the federal government’s official commodities forecaster — the Australian Bureau of Agricultural and Resource Economics and Scien-
ces — had forecast farmers would deliver a 21.9 million tonne haul.
Cutting their forecasts, NAB analysts cited “very tough” conditions in many parts of the country.
A domestic feed shortage for livestock might also keep prices at a premium, at least compared with benchmarks in other countries, according to Bloomberg.
Eastern Australian wheat for delivery in January is now trading at $333 a tonne. Just six months ago, the same contract hit a trough below $265.
Rising wheat prices are likely to put pressure on heavyweight bakers such as Singapore-owned Goodman Fielder, which makes brands including Helga’s, Wonder White and Mighty Soft, and British-owned George Weston Foods, which makes Tip Top.
Independent bakers and chains such as Brumby’s and Bakers Delight — which together command sales of more than $2 billion a year — will likely also feel the pinch.
According to a study published last year by research house Roy Morgan, 13.9 mil- lion Australians ate bread in an average week the previous year.
Almost 11 million Australian grocery buyers bought bread in any given seven-day period, spending an average of $8.20, or almost $90 million between them.
The two big grocers, along with Aldi and independent supermarkets, accounted for about 68 per cent of bread sales, according to Roy Morgan, with bakeries cornering another 25.5 per cent of the market.
D’OH! Crunch time for bread prices $330 A ATONNE TONNE The price for wheat due for delivery in January, up 25 per cent over the past six months 20m TONNES NAB’s forecast for Australia’s winter crop, down from 21.3 million tonnes a month ago $90m OUTLAY By Australian grocery buyers on bread in any given week, according to Roy Morgan