Mar 19 2008

Concerned about the rising price of wheat?

Concerned about the rising price of wheat? So is Bethany, who asks:

I wondered if you’re planning to stock up on extra flour before the wheat prices get too high. I’d love to hear your opinion about bulk buying while you’re feeding only two, like I do.

I’ve seen several news reports and bloggers mention the price of wheat is on the fast climb.

From the AP:

"Poor wheat harvests in Australia and parts of Europe and the U.S. have caused China and other Asian countries to buy up more American crops, which are especially attractive because of the weak U.S. dollar.

"At the same time, the American crop is shrinking because of federal incentives to grow corn for ethanol. And skyrocketing gas prices make it costlier to get any wheat to market. Those same pressures have also made it more expensive to supply feed grains for livestock."

Oh, good grief. If it isn’t one thing, it’s something else, isn’t it?

So, there’s a high demand from the rest of the world and a diminished supply. Basic economics…prices are going to go up.

"Wheat historically trades at $3 to $7 a bushel.But this week, futures of spring wheat — which produces the flour used in hearth breads, rolls, croissants, bagels and pizza crust — were close to $18 a bushel on the Minneapolis Grain Exchange. They climbed as high as $24 in late February.

"Consumers pay an additional penny on wheat products for each dollar the price-per-bushel increases."

Watch out, now!
To answer Bethany’s initial question regarding flour: I’d say if you have the storage space, desire, and room in the budget, go ahead and stock up on flour if it’s something you normally use a lot. If you can’t remember the last time you cooked or baked with flour, then you probably don’t need to stock up too much. Maybe buy a 5-lb. sack and put it in your freezer.

I don’t use much flour, though I would like to start baking my own bread, if I ever get around to it. So, I’ll probably pick up a few more sacks while the prices are still down.

And, if I can get enough flour or whole wheat for flour now, I could bake bread at much cheaper than the store-bought version.

Expect most food prices to go up.

Look in your pantry, fridge and freezer. How much of it has something to do with flour? Maybe it’s a direct by-product of wheat. Those foods will be hit hard.

Do you like grain-fed cows? Maybe farmers can feed them corn or something (I dunno what cows eat, really. Anyone wanna help me out?). Anyway, if your meat sources eat wheat, prices will go up there, too. That could include milk and cheese, too.

Same for wheat-fed chickens. Eggs and well, chicken meat could go up in price.

The price of an extra-large cheese and ground beef pizza could go up quite a bit, wouldn’t ya say?

More likely though, in my opinion, groceries and restaurants will end up raising prices on most things, to offset the really expensive price hikes.

The bottom line:

Don’t panic. It’s easy to freak out anytime gas prices go up, or any random commodity spikes in price. It’s really going to be fine. Stock up on items if you have room in your budget, and just keep on being frugal.

4 Responses to “Concerned about the rising price of wheat?”

  1. It’s not just wheat — as pointed out in one of your quotes, it’s all grain that is going up (and up). Cows aren’t fed wheat, most are grass or hay fed for the first year to two years and then spend 3-6 months at a feed lot where they are grain fed (mostly corn) before slaughter. Chicken are grain fed as well (again, mostly corn). But the price of corn has shot up because of the ethanol boom.

    I wouldn’t say panic, but I don’t believe this is just a random spike in one commodity — this is starting to spread across the board. Prices may receed a tad after they jump, but we will be seeing higher prices for good on many things. Too many things have happened (and continue to) for a full correction.

    We have stocked up some — cereal (another grain product), flour, and some meats in the freezer. I’d like to do a little more, if I could find any more good deals!

  2. We haven’t been stocking up but I’ve really been noticing an increase in prices across the board when I go grocery shopping. I am definitely more careful to look through the ads and plan my shopping (and eating) around the sales that are going on.

  3. Thanks for addressing this, I agree that it would be odd to fly into a panic regarding wheat futures, but since I can see the higher prices coming, I know what I’ll be stocking up on.

    Rachel’s point about the higher corn prices is a good one. That’s why milk and eggs have gone up in price, because corn is being sold at higher prices for fuel than it is for food. Corn is the grain that is mainly used for livestock feed, but with wheat going up in price as well, that raises the prices on all the non animal foods, like you pointed out, like cereal and bread. I guess it’s beans and rice for the really frugal among us, like it usually is, lol.

    Since I’m not much of a beans and rice everday person, and I do bake all our bread and rolls and such from scratch, I’m planning to stock up about a six to eight month supply of flour. I’m not sure I’d be comfortable trying to keep it good for much longer. And some advice to your readers; if you do buy lots of flour, don’t store it in the bag only, that’s a good way to get bugs. Make sure to empty it into a container, or put it into a freezer bag if you’re storing in the freezer (not that there’s bugs in the freezer, but there are off smells). Where can you find containers that are big enough to hold so much flour? The buckets that frosting comes in for the bakery section of your grocery store are perfect. They’re food safe and have a rubber airtight seal on them. You can get them in a couple of sizes, as big as five gallon bucket sized. My grocery store just throws them away, so they let me have a couple for free. Now I’ll just have to find a good deal on flour in the coming weeks.

  4. We’re wheat farmers so I guess it’s one price increase that I won’t mind. Unfortunately all our costs are skyrocketing and if wheat prices don’t go up, there’s going to be a much bigger problem than simply increasing prices – there simply won’t be farmers around here to grow anything.

    Mind you, I’d be surprised if the government (I’m in Australia) would let that happen. But we’re coming out of 4 years of drought out of the past 6 with our expenses going through the roof.

    World economics is going to be rather interesting in the next decade or so. Which only makes frugal living, no debt and generally being content with needs (and less wants) all the more important. :)

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Hey! I'm Kacie, wife to Shane and mother to Jonathan (7), Vivienne (5) and Amelia (2) . I write about my family's finance: how we save money, improve our spending, and plan for the future.

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