KANSAS CITY — As we pass the midpoint of 2022, no less uncertainty prevails in the markets than 6 or 12 months earlier amid war in Ukraine, highly pathogenic avian influenza (HPAI) lingering, effects from COVID, weather, logistics, record-high gasoline and diesel fuel prices, and a possible recession. Commodity and ingredient prices mostly are up from the start of the year and certainly from a year ago. The path forward is anything but clear.
During the first six months of 2022 some wheat futures prices set all-time highs only to plunge in late June. Most edible oils prices followed a similar trajectory. Spot refined cane sugar prices were offered near 50-year highs, and spot beet sugar was unavailable. An unexpectedly large outbreak of HPAI sent egg, egg product and turkey prices soaring as nearly 40 million birds (mostly laying hens and turkeys) were euthanized to prevent spread of the disease.
Sosland Publishing’s bakery and food ingredient indexes reflect the direction prices have been moving. Since the first of the year, the index for devil’s food cake has doubled. The index was up 73% for cake donuts, 42% for shortbread cookies, 14% for saltine crackers, 10% for bagels and 7% for white pan bread, the latter in part reflecting sharply lower wheat prices in June. The only index lower than at the start of the year was pasta as the price of cash durum has dropped $2.75 a bu, or 15%, with millers expecting a much better durum crop in the United States and Canada after last year’s drought-reduced production.
The changes from June 2021 are more dramatic, with all indexes up sharply. The index for devil’s food cake was up 129%, for cake donuts was up 101%, for pasta was up 65%, for shortbread cookies was up 49%, for white pan bread was up 41%, for bagels was up 34% and for saltine crackers was up 32%.
The Sosland food ingredient indexes in late June were up about 25% to 55% from a year earlier except for the sausage index that was down 8%.
Looking at price changes for individual ingredients helps explain the index changes.
The situation in sugar is perhaps the most dramatic. The baking industry is the largest sugar-using sector. The sugar content of baked goods may be well below that of other ingredients (notably flour), but it is in most items. Spot refined cane sugar currently is offered at 68¢ a lb, up 51% from a year ago and the highest since 1974. A force majeure by a major beet processor, limited imports and stronger-than-expected demand have created a near-crisis supply situation in the sugar market. The Independent Bakers Association in late June (along with other users in recent months) petitioned the US Department of Agriculture to increase sugar imports to help reel in food inflation. Prices are expected to remain near current levels through calendar 2022.
Flour prices (from both hard and soft wheat) peaked with wheat futures in mid-May at levels up about 55% to 80% from a year earlier. Prices have tumbled about 15% to 25% from those highs as wheat futures turned sharply lower in late June but remain well above year-ago levels with wheat prices still historically strong.
Egg prices appear to have peaked in mid-May, and egg product prices appeared to have peaked in early June, although dried whole egg and yolk have yet to adjust lower amid strong demand. At the height of the HPAI outbreak, breaking eggs were 4.7 times their year-ago value, Grade A large (retail) eggs were 3.5 times, and dried products were 3.8 times to 5.8 times above a year ago. Although prices have declined, values remain historically strong, and repopulating laying flocks may not be completed until early 2023.
Edible oils prices have been supported by the war in Ukraine (loss of sunflower seed and oil exports), tight supplies after a weather-reduced 2021 canola crop in Canada, smaller 2021 soybean crops in South America, a brief palm oil export ban by Indonesia, and strong demand from the renewable fuels sector. Prices for 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 at all-time highs. Prices have since fallen sharply (though still above year-ago levels) in part as 2022 crop prospects improve and on weakness in crude oil.
Presenters at the Sosland Publishing Purchasing Seminar in early June generally forecast continued strong prices for most commodities and ingredients through 2022. Mostly favorable weather so far in the US growing season and rapidly advancing winter wheat harvest, among other factors, appear to be tempering prices for now.
Mid-year update: Most ingredient prices remain exorbitant - Food Business News
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