The wholesale price of wheat, one of the primary commodities affected by the current war in Ukraine, has risen 32 percent, from $9.18 to $11.2 per bushel (27.4 kilograms), just since the beginning of the week. It is thus at a 14-year high, XTB analyst Stepan Hajek said. This development will mean a partial increase in bread or rolls in the Czech Republic, he said.
According to Hájek, the price of wheat is only about 30% of the price of bread. Other costs are related to production, human labor, marketing, sales, and other raw materials. This means that the final price of bread will not directly reflect the percentage increase in the price of wheat on world markets, but the final price will increase by a maximum of one-third.
Russia and Ukraine are responsible for a third of global wheat exports. Although these two countries export wheat mainly to countries in Asia and North Africa, the price on world exchanges may partly affect the Czech market.
In January, prices of bakery products and cereals rose by 9.4 percent, Hajek pointed out. Consumer prices usually lag behind market prices for wheat, as the commodity’s price is contracted in advance. Thus, the impact of higher wheat prices may not be felt for several months after the increase occurs.
The rising world market prices may also force some producers to consider selling wheat at higher prices, for example, abroad. “So we are unlikely to get a break from price increases for some time, although the real impact of wheat price increases is difficult to estimate at this point,” he noted.