Millers and bakers are draining wheat reserves and paying more for spring wheat used in baking, as drought shrivels crops across the Canadian Prairies and northern U.S. Plains that produce more than half of the world’s supply. U.S. and Canadian farmers are bracing for a sharply smaller spring wheat harvest due to the driest conditions in decades, as severe weather damages crops across the hemisphere, from heat scorching cherries in the U.S. Pacific Northwest to frost chilling sugarcane in Brazil.
While overall global wheat stocks are large, the drought affects mainly the high-protein spring wheat crop that millers such as Archer Daniels Midland Co (ADM.N) and bakers including Grupo Bimbo (BIMBOA.MX) rely on to produce the texture and moistness in baked goods that consumers expect.
Importers from Britain to China must pay up for limited North American harvests or turn to other suppliers like Australia and Russia. Minneapolis spring wheat futures are trading near nine-year highs, leaving Camas Country Mill in Eugene, Oregon braced to pay more, said owner Tom Hunton. He plans on passing his higher costs on to the mill’s bakery customers.