I get a laugh out of folks who say… speculators have little or no effect in the everyday lives of consumers.
Ostensibly, it’s never a good thing when a vast supply of any commodity, in this case, wheat, is taken out of the supply and demand equation by a devastating round of wildfires. Russia has experienced a severe drought and record high temperatures, which has turned the biomass into kindling, and when lit, went up in smoke even faster than wheat futures contracts.
Bottom line: it’s a no brainer that bread prices are heading upwards short term. It’s also possible the cost of animal protein could rise since feed costs could rise in tandem.
In part, the spike higher is due to traders buying large quantities of futures contracts so they can take delivery for their customers to keep prices low. That’s no big deal, and it happens everyday. However, you’re fooling yourself if you don’t believe a substantial quantity of this price spike isn’t due, in part, to speculators.
Alas, looks like deflation at the grocery store won’t be happening anytime soon.