Russian drought results in high wheat and food commodity prices

Wheat is about to get significantly more expensive, according to the latest report from the UN's Food and Agriculture Organization.

Estimates for this year's harvest in the Russian Federation fell from 48 to 43 million metric tonnes, a drop which is reflected in the FOA's prediction that the commodity's price will continue to rise. The sudden change in expectations is the result of a drought in the country, which prompted restrictions on wheat sales.

The FOA said that the surge in its Food Price Index, which measures the month-over-month change in the price of a basket of food commodities, was partially a result of these events and also driven by "higher sugar and oilseed prices." The price increase will be felt across a variety of different products, in everything from flour to breakfast cereal to frozen dinners.

Lawrence Watson, head of sales and marketing at flour supplier ADM Milling, told British Baker: "There has been a 70 percent year-on-year rise in raw material costs. This has been driven by the prediction of a 20-million tonne drop in the global harvest, which has impacted heavily on world prices."

According to the FOA, international food prices have reached their highest level since June 2008. The Rome-based organization said its food price index shot up 5 percent between July and August.