Home ›› 06 Aug 2021 ›› World Biz
Millers and bakers are draining wheat reserves and paying more for spring wheat used in baking, as drought shrivels crops across the Canadian Prairies and northern US Plains that produce more than half of the world’s supply.
US and Canadian farmers are bracing for a sharply smaller spring wheat harvest due to the driest conditions in decades, as severe weather damages crops across the hemisphere, from heat scorching cherries in the US Pacific Northwest to frost chilling sugarcane in Brazil.
While overall global wheat stocks are large, the drought affects mainly the high-protein spring wheat crop that millers such as Archer Daniels Midland Co and bakers including Grupo Bimbo rely on to produce the texture and moistness in baked goods that consumers expect.
Importers from Britain to China must pay up for limited North American harvests or turn to other suppliers like Australia and Russia.
Minneapolis spring wheat futures are trading near nine-year highs, leaving Camas Country Mill in Eugene, Oregon braced to pay more, said owner Tom Hunton. He plans on passing his higher costs on to the mill’s bakery customers.
Camas Country will rely on stockpiled wheat from last year to top up this year’s supplies to produce flour. But Hunton worries about the drought carrying into next year.
“This isn’t sustainable for anyone,” he said.
In Canada, bread prices may rise as much as 6.5 per cent by late this year, said Sylvain Charlebois, director of the Agri-Food Analytics Lab at Dalhousie University in Halifax, Nova Scotia.
US prices are more difficult to forecast, since flour prices dropped earlier this year as lockdowns eased and fewer people baked at home, he said.
Importers adjust
China, which normally buys modest amounts of North American spring wheat to make high-quality bread and baked goods, will likely buy more from other suppliers such as Australia, said a China-based trader with an international trading house.
Russia may make up some of North America’s shortfall in the global market. Southern Russia, the country’s main wheat-producing region, is producing wheat with higher protein than a year ago, Dmitry Rylko, head of the Moscow-based IKAR consultancy, said.
Spring wheat from Russia and Kazakhstan, however, does not have the same characteristics important for baking, such as gluten strength, as U.S. hard red spring wheat and Canadian Western Red Spring, said Mike Spier of US Wheat Associates, a trade group that promotes US wheat overseas.
The drought will force bakers to change how they work with flour, adding more water to compensate for dryness and making other adjustments to avoid producing crustier-than-usual buns, said Glenn Wilde, owner of Harvest Bakery in Winnipeg, Manitoba.
United Kingdom baker Warburtons buys half of its wheat from Canada, about 200,000 tonnes annually, grown by farmers to the company’s specifications. The company will pay more this year to ensure it acquires enough Canadian spring wheat, said Adam Dyck, Warburtons’ Canadian program manager, adding that many kernels may be too shrivelled to mill into flour.
Dyck said he is accustomed to seeing pockets of drought on the Prairies, but nothing this widespread.
“It’s pretty unique for this generation,” he said.