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

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