More inflation ahead as wheat prices continue to rise
Wheat prices rise again in fresh tender: Egypt has seen the price of Russian wheat rise another 1.5% in just a few days as its state grain buyer issued its second international tender in less than a week. The General Authority for Supply Commodities (GASC) yesterday purchased 180k tonnes of Russian wheat at an average price of USD 332.30 a tonne, according to Reuters, up from USD 328.05 per tonne last week when it bought 360k tonnes of from Russia, Romania and Ukraine
Egypt is shelling out the most in at least half a decade on wheat, and if the current price trajectory continues, it could be a challenge for the world’s biggest wheat importer. The government is preparing to start reducing bread subsidies to soften the impact on the state budget, and though the government is in talks to take out hedging contracts against further price rises, yesterday’s tender saw it pay almost USD 80 more per tonne than the USD 255 average price in the 2021-2022 budget (pdf).
This is all likely to provide further fuel for inflation in the coming months: Food has been the key culprit behind the recent rise in headline inflation, which in September hit a 20-month high of 6.6%.
US wheat prices yesterday hit their highest levels in almost nine years, with Chicago futures reaching USD 8 a bushel due to surging global demand and increasing fertilizer prices, according to Bloomberg and Reuters.
What’s fuelling the price surge? A convergence of factors, including reduced crop production in some of the world’s biggest producers, higher shipping costs, surging fertilizer prices, and trade tariffs, have pushed up global prices to highs not seen in years.