Cereal prices are breaking records
23:46
In mid-August, wheat was down 30-35 percent more expensive than a year ago, and at the end of the month, the price on the MATIF exchange reached its historically highest level during the harvest season.
"Usually, the harvest brought a drop in prices. This year it is the opposite, prices are rising and nothing indicates a large and decisive price correction in the coming months," Krzysztof Gwiazda, president of the board of the Polish Association of Grain-Mill Industry Employers, assessed.
As a result, price increases for flour and bread can be expected. From the beginning of the year, as indicated by the Central Statistical Office (GUS), they went up by 3.6 percent y/y and 5.9 percent y/y, respectively.
Purchase prices paid to Polish producers are a derivative of quotations on world stock exchanges and the zloty/euro and dollar exchange rates. On the MATIF exchange, consumption wheat (in a contract with delivery in September this year) costs about €273. A year ago, it was around €185. At the current weakened EUR/PLN exchange rate, it is almost PLN 1,250 compared to PLN 850 a year ago.
Market prices for wheat and rye have a direct impact on the price of flour. Non-raw material costs are also important, i.e. the price of electricity, which in Poland has grown very strongly in the last few years. The grain and mill industry coped with this growth thanks to long-term electricity contracts at prices two to three years ago. These, however, are gradually expiring and new ones need to be negotiated, but at much higher prices, taking into account additional fees that have come into force in recent years.
"On top of that, labor costs are getting higher and higher. A mill is a factory where everything cannot be automated," Krzysztof Gwiazda added.
According to the latest data from the GUS, in July, the price of flour increased by 2.1 percent y/y and by 1.4 percent m/m. From the beginning of the year, the increase was 3.6 percent. At that time, the price of bread increased by nearly 6 percent.
(Newseria)
