War in Ukraine may impact food prices

[Mike Nolan]

The Lincoln paper has a story today on how the war in the Ukraine is likely to increase the price of wheat and corn, both major export products for the Ukraine.

Add to this the growing number of economic sanctions being levied against Russia (which always seem to affect us at least as much as them) and food prices are likely to go up.

Wheat prices are already higher than the peaks experienced in 2008 and 2013, though down a little from last November but likely to go even higher. Corn prices are still well below the 2011-13 peaks but going up as well.

Oil futures prices topped $100/barrel on world markets today, and natural gas prices are surging in Europe. Let's hope we don't have the kind of temporary instability that cost consumers dearly last February. (We've still got about a $45/month surcharge on our gas bill for the next 2 1/4 years to pay for the spot price surge last February.) And we're in the middle of the biggest cold snap of the winter.

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[Italiancook]

Today, I read that U.S. consumers haven't altered their buying habits in spite of inflation. I wonder whether the Ukraine situation will change that.

Mike, how is all this going to play out in the flour market? Do you think we'll only pay higher prices for our flour, or will the war in Ukraine cause flour shortages? My marginal utility for stockpiling flour has peaked and is quickly going downhill. I'm unsure I want to deal with shortages in flour and hope it doesn't come to that.

[Mike Nolan]

Both futures prices and spot market prices for wheat are near multi-year highs, which suggests there will be flour price increases at some point, though the major flour producers probably already have their wheat supplies and prices locked in for the next several months if not longer.

I've been seeing flour prices going up at the grocery store, like nearly all other foodstuffs.

There may be some channel issues and some diminished product availability, but will we see the shortages we saw in early 2020? My guess is probably not, that was due to a combination of panic buying or hoarding and people who weren't baking before the pandemic hit buying flour and trying their hand at baking. I don't know how many of them kept at it, I know my son did it for a while but has backed off a lot since then, in large part because he's changed jobs twice since the pandemic hit.

[BakerAunt]

I agree with Mike that the U.S. is not going to see the flour scarcity that we saw during the pandemic. It is more complicated in the rest of the world. Ukraine sells its corn and wheat to Africa and the Middle East, so the people of those countries will be most directly affected by shortages and food insecurity. China is allowing Russia to sell its wheat to their country rather than restricting it.

If we learned anything from the pandemic it is that, in our world economy, shortages or crop failures create a ripple effect. War does as well.

[Mike Nolan]

CNBC is saying that wheat prices are at levels not seen since April of 2008.

Oil prices are over $100/barrel, the last time they were that high was in 2014, but they're nowhere near the peak in 2008 of nearly $180/barrel.

[BakerAunt]

The war in Ukraine is now directly threatening the food supply in countries that depend on its grain exports:

https://www.msn.com/en-us/news/world/ukraine-bans-exports-of-wheat-oats-and-other-food-staples/ar-AAUPAmQ?ocid=msedgntp

[Mike Nolan]

Bakers on the BBGA forum are reporting significant increases in flour prices from their suppliers, and some suppliers are not taking on new flour customers.

I haven't seen the kind of shortages we saw in March of 2020 in grocery stores--yet. But I think many of those who turned to baking during the early parts of the Pandemic have gone back to work or otherwise moved on from baking.

[Mike Nolan]

Another WSJ story today says that sanctions on the Russian fishing industry is likely to make cod, pollock, crab and other seafood harder to find, which will translate to more out of stock issues and higher prices.

[Mike Nolan]

If you think the 8.5% annual retail inflation rate that came out the other day was bad, the latest producer price index was up 11.2% from a year ago. That means more retail inflation is coming.

The talk of 'transient' inflation seems so outdated, now the 'experts' are just saying that inflation has peaked.

Somehow, I doubt that will be the case.

[BakerAunt]

I'm looking forward to our vegetable garden this summer.

[Mike Nolan]

I'll be interested to see what the farmers market prices are like when they open up in two weeks. They're generally higher priced than store produce prices. Whether they're better quality or not is something not everyone agrees on.

[BakerAunt]

Red and yellow bell peppers and avocados soared in price at the local in-town grocery store. $1.99 per avocado is steep. I suspect that the mess the Texas governor has created at the border by bottlenecking trucks is causing these upswings.

[chocomouse]

And $1.69 for a sweet pepper! I wonder what the local farm stands will be charging this summer. I know the cost of their supplies, from compost to seeds to containers, has increased tremendously. I do hope they raise their prices, as their profit margins have always been low.

[Mike Nolan]

Sweet pepper prices vary a lot, I've seen them at $2 or more each lately, or 3 for $5, but I've also seen them at well under $1 each.

I don't know what an avocado costs, we never buy them.

Celery prices seem to be pretty high right now and iceberg lettuce was nearly $3 a head lately. I planted some iceberg lettuce in my Aerogarden, just to see how well it grows there.

The last time we bought chicken at Popeyes, the legs were so small they were more like wings for size and amount of meat on them.

I hear Costco, Sams and other places that do rotisserie chickens have told their growers to make them smaller so they cost less. (less time to feed means lower costs to raise.)

[BakerAunt]

We were surprised at how large the rotisserie chicken we bought at Safeway in Colorado and the one we bought at Walmart in Rantoul, IL were. We are used to ones that barely last two days.

The local store wanted $2.99 per yellow bell pepper, and they were not even in that great of condition. The red bell pepper was on sale for $1.99, but that was because they all had soft spots.

I have paid anywhere from 79 cents to $1.29 for an avocado. I've figured out how to tell if I am getting a good one: rough skin, not blackened, and not soft. I put them in a bag to finish ripening before I eat then.

I expect the farmers' market prices will increase, although so far, I'm paying the same for kale, lettuce, and spinach. I'm hoping that our garden will have a better tomato year than it did last year. The beans usually do well. We have pepper plants in pots in the house, so that should give us a head start. My husband's attempt to grow lettuce and spinach under our grow light is producing only a miniscule amount if lettuce.

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