Will It Cost More Bread To Make Bread?

U.S. wheat prices have jumped nearly 50 percent over the past few months thanks to a combination of events. Drought and wildfires in Russia prompted that country to ban exports through next year — cutting supply on the international market. And Canada says its production will be lower than expected. But it's not yet clear whether this will lead to higher prices for bread and other products that use flour.

At the beginning of the summer, wheat was selling for about $5 a bushel in the U.S. Then Russia announced its export ban, and prices rose nearly 50 percent to more than $7 a bushel. Prices have since settled at just under $7, but there are concerns that prices could remain high over the next year.

“It has put a lot of stress on the international market for wheat,” says Michael Denton, partner at business consulting firm Oliver Wyman. “Inventories are still at a relatively decent level, but there's a lot of nervousness about how that's going to play out as the season comes to harvest.”

Denton co-authored a report that says higher prices could cost the food industry $2 billion this year, and considering the current economy, those companies may not be able to pass those extra costs along to consumers.

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