Mid-Year Update: Prices for most components remain exorbitant

Kansas City
As we pass mid-2022, market uncertainty is at least 6 or 12 months before the war in Ukraine, the survival of highly pathogenic avian influenza (HPAI), the impacts from coronavirus, weather, logistics, and gasoline and diesel fuels are on the rise. Record prices, possible recession. Prices of commodities and components have mostly gone up since the beginning of the year and certainly since a year ago. The way forward is not at all clear.

During the first six months of 2022, some wheat futures prices set all-time highs to fall in late June. Prices for most edible oils followed a similar path. Prices for instant refined cane sugar were shown near 50-year highs, and instant beet sugar was not available. An outbreak of the highly virulent bird flu virus unexpectedly drove up prices for eggs, egg products and turkeys with nearly 40 million birds (mostly chickens and turkeys) killed to prevent the spread of the disease.

Sosland Publishing’s bakery and food ingredient indices reflect the direction in which prices have been moving. Since the first of the year, the devil’s food cake index has doubled. The index is up 73% for bagels, 42% for short cookies, 14% for salt crackers, 10% for bagels and 7% for white bread, the latter partly reflecting a sharply lower wheat price in June. The only indicator that was lower than at the start of the year was pasta as the cash price fell $2.75, or 15%, as millers expect a much better harvest in the US and Canada after production fell last year due to drought. .

The changes from June 2021 are even more dramatic, as all indicators rose sharply. The devil food cake index rose 129%, bagel rose 101%, pasta rose 65%, devil cake index rose 49%, white bread rose 41%, bread rose 34% and salted crackers rose 32%.

Food ingredient indices in Sussland in late June were up about 25% to 55% over the previous year, excluding the sausage index, which was down 8%.

Looking at the price changes of the individual components helps explain the changes in the indicator.

The situation with sugar is perhaps the most dramatic. The baking industry is the largest sector that uses sugar. The sugar content of baked goods may be much lower than that of other ingredients (particularly flour), but it is present in most items. Instant refined cane sugar is currently offered at 68 pounds, up 51% from last year and the highest level since 1974. Force majeure through a major beet processor, limited imports and stronger-than-expected demand has led to a near-supply crisis in the sugar market. The Association of Independent Bakers in late June (along with other users in recent months) asked the USDA to increase sugar imports to help counter food price inflation. Prices are expected to remain near current levels until calendar 2022.

Flour prices (both hard and soft wheat) peaked with wheat futures contracts in mid-May at levels that rose around 55% to 80% from a year earlier. Prices are down about 15% to 25% from those highs as wheat futures turned sharply lower in late June, but remain well above last year’s levels as historically strong wheat prices persist.

Egg prices appear to have peaked in mid-May, and egg product prices appear to have peaked in early June, although whole eggs and powdered yolks have not adjusted for a decline amid strong demand. At the height of the outbreak of HPAI, the egg fraction was 4.7 times its value a year ago, the first-grade large (fragmentation) eggs were 3.5 times, and the dried products were 3.8 times to 5.8 times above last year. Although prices have fallen, values ​​are still historically strong, and the resettlement of white herds may not be completed until early 2023.

Edible oil prices have been buoyed by the war in Ukraine (loss of sunflower seeds and oil exports), tight supplies after a lower 2021 canola crop in Canada, smaller 2021 soybean crops in South America, a brief palm oil export ban by Indonesia, and demand Strong sector of renewable fuels. Prices of soybean oil, palm oil and canola oil peaked in late April, up about 28%, 60% and 26%, respectively, from a year ago with some oils hitting all-time highs. Prices have since fallen sharply (although still above last year’s levels) in part as prospects for the 2022 crop improve and because of weak crude oil.

Presenters at the Sosland Publishing Procurement Seminar in early June generally expected strong prices for most commodities and components to continue into 2022. Mostly favorable weather so far in the US growing season and rapid progress in the winter wheat harvest, among other factors, appear to be leading Currently lowering prices.

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