The effects of the extreme weather has led to lower than usual volumes of wheat, pushing futures contracts as much as 24% in the past six months.
Futures contracts are a deal to buy or sell something at an agreed price at a fixed future date, commonly used in commodities trading. They are a good indication of where the price for commodities will head.
In the UK, the smaller than usual harvest sent prices up to £190 ($247) a tonne compared with £120 ($156) a tonne in 2016.
“There is no doubt price increases are in the pipeline,” said Gordon Polson, director of the country’s Federation of Bakers.
“[Profit] margins are very, very tight as the industry has acknowledged and it doesn’t take much to tip you into the red.”
Small but good
According to Matthew Chick, operation’s manager at flour miller Carr’s, the sustained hot weather has meant the harvest starting around four weeks early in the UK and EU.
“A result of such warm weather was that crops went through the various growth stages very rapidly, which has undoubtedly resulted in lower yields but left good quality.
“Weather is one of the key determinants on price and quality. In years where there are adverse weather conditions, production is likely to be lower [pushing up] futures and prices,” said Chick.
The Essex-based miller – which has been milling flour since 1896 – said the weather has certainly added challenges.
This year’s wheat is so dry that, unless handled correctly, it can shatter during the early stages of the milling process, making it harder to separate the bran (darker) from the endosperm (the white part that becomes flour).
Shattering can result in bran particles that are the same size as the endosperm particles, making it more of a challenge to remove the bran particles.
The shattered particles are also sharper, which can burst the air bubbles desired in baked goods and affecting the product’s crumb structure.
“The extended period of sun has produced a harder, smaller grain with less endosperm. However, we have seen that the quality of protein is higher,” said Chick.
“Due to the hardness of the grain, mills such as ours are having to spend more time conditioning the wheat before it is ready to mill.”
Impact on bread making
Limagrain Céréales Ingrédients (LCI) – an international cooperative group created and directed by French farmers – has also said the quality of this year’s wheat will have an impact on bread making.
“The dough is very low in elasticity and has very high extensibility,” said Sophie Chapron, R&D manager for LCI.
“We notice a lack of tolerance and a lack of volume so we can really say that, this year, the strengths of the flour will be decreasing and we have to face the specific characteristic of the dough and the final product.”
To overcome these challenges, LCI has recommended that bakers:
• Decrease the kneading time and adjust the shaping step
• Increase the high proteins wheat content in the raw wheat blend (to have more tenacity)
• Add ascorbic acid
• Reduce the amount of extension agents for tolerance
She said LCI had noticed a decrease in the protein content in general, compared to last year.
The extreme weather is affecting other areas of the world, too.
Australia lowered its wheat forecast for the 2018/2019 season by nearly 13% from 21.9m tonnes to 19.1m tonnes, as a crippling drought across the country's east coast has cut output from the world's fourth-largest exporter to a 10-year low, according to Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES).
FAO now forecasts global cereal production in 2018 to reach 2,587 million tons, a three-year low and 2.4% below last year’s record high level.
Nigeria’s own bread woes
The Premium Bread Makers Association of Nigeria (PBAN) has warned that bakers will need to increase the cost of bread following the ever-increasing prices of ingredients like flour, sugar and yeast.
According to Jemide Tosan, president of PBAN, baking ingredients had increased threefold in the past three years.
Between 2015 and 2018, the price of flour had increased from N6,500 ($17.97) to N11,500 ($31.81) per 50kg bag.
Sugar had seen 77% rise in price in the same period; likewise, salt (84%), margarine (67%), yeast (45%) and improvers (160%).
The price of diesel – used to power factory generators – also rose, by 57%.
The government also charges 15% extra duty for wheat importation into Nigeria.
Conversely, the price of bread had only witnessed an 11% rise in the period.
“The challenges we face as a result of incessant increase in the prices of baking ingredients have rendered most premium bakeries comatose, making us to operate at a loss,” Tosan told the media.
“Given the current situation, most premium bakeries may be forced to embark on a price increase, which will further make bread unaffordable to the common man.
“In light of this, we appeal to the Federal Government to look into the issues that currently threaten the existence of the premium bakery industry in Nigeria.”
The country has a population of over 180 million, growing at an estimated of 5.7% per annum, so the demand for bread is high.