Flour millers feel the heat

The heat wave that has hit Europe has affected the production of a number of crops, not least wheat. As a consequence, wheat prices across Europe have soared over the last two months, with searing temperatures and drought-like conditions cutting output in many important grain producing countries. France has been particularly affected.

As a result, many of the continents' millers have had to raise their costs. Britain's biggest flour miller, Rank Hovis, for example has increased the cost of its flour products by an average of 15 per cent.

Hovis​ claims that the the price increases, which are likely to be phased in over the next few weeks, are unavoidable. Wheat purchasing accounts for 70 per cent of the group's costs.

The company's wheat director Peter Jones told Reuters news agency that it was therefore inevitable that some of these costs would be passed on to customers.

"Wheat prices paid by millers for June and July have already shown a 20 pounds a tonne increase on the year and new crop prices are showing an increase of almost 25 pounds a tonne - millers cannot absorb these increases,"​ said Jones.

In addition, tightening supplies in eastern and central Europe, where output has also been hit by a series of weather-related problems, have increased concerns about cereal supplies.