Inflation, war and pandemic make wheat price soar 130%

A survey by MLB consultancy obtained by CNN shows that the price of wheat in Brazil soared 130% between January 2020 and April 2022.

The price jump was driven by a combination of factors that include the coronavirus pandemic, commodity inflation and the Ukrainian War, which took Russia and Ukraine, Russia and Ukraine, off the table.

The document serves as a basis for updating the customers of MLB, which serves associations and companies in the milling and bakery sector.

The research was conducted by Luiz Carlos Caetano, a consultant for over 30 years in this market. He calculated the price based on an average between the amounts charged to Argentine, Paraná and Rio Grande do Sul producers, which even have freight variations depending on the city of origin and destination.

“Today, the ton is around R$ 2,000, R$ 2,100, or something like US$ 400 to US$ 410, but it has reached US$ 465”, he says.

The calculation was based on bread-making flour, which represents more than half of consumption in the country, but there is a wide variety of products, such as specific flour for cookies and pasta.

The price of the sack of flour rose on a smaller scale than the value of the wheat itself. Between January 2020 and April this year, the increase was 117%.

“I will say something that is often talked about in the mills, the price of wheat goes up in the elevator and flour goes up the stairs, so the price of wheat flour did not reflect the increase in wheat. To give you an idea, in March, flour rose 4% and wheat rose 14%”, says Caetano.

One of the factors for this difference is that supermarkets and large industries make long-term contracts, managing to maintain the price level even with international fluctuations.

THE CNN found that items in this sector, such as industrialized breads and pies, had a price increase beyond the marks of inflation, but there is a concern of the sector’s entrepreneurs about the drop in consumption, which can be intensified depending on the escalation of prices.

The increase in freight enters into the account of industrialists, which should end up accompanying diesel. To make matters worse, Russia and Ukraine, respectively the world’s largest wheat supplier and fourth largest, had almost zero shipments with the war.

“Inflation this year has risen around 4% so far and products have already doubled or tripled in terms of inflation until April. Because of the war in Ukraine, because the price of fuel has increased a lot and oil also makes packaging, so it has all this reflection. For example, industrial breads, of which more than half are multigrain and wholegrain, which use grains other than wheat, also rose together, so there are a number of factors,” explains Caetano.