July 20, 2023
What's New: Wheat futures are on a rising tide in the U.S., hitting a three-week peak of $7.3 per bushel. This surge, marked by an 8.5% rally—the largest gain since 2012—has the potential to soon affect U.S. restaurants.
Why it Matters: Unrest between Russia and Ukraine is fueling the increase. Attacks on key Ukrainian infrastructure, a warning from Russia about ships to Ukraine's Black Sea ports, and the termination of the Black Sea grain deal are disrupting the global grain supply chain. Simultaneously, dry weather in major U.S. wheat-growing regions is dampening yield expectations.
Impact on U.S. Restaurants: Higher wheat futures prices can lead to increased spot prices—current market prices for immediate delivery. Once this happens, it could pinch restaurants, especially those heavily dependent on wheat-based products like bread and pasta. The timeline for these impacts depends on the severity and persistence of the geopolitical and weather conditions driving the wheat price surge.
The Bottom Line: As geopolitical tensions and unfavorable weather conditions drive wheat costs upward, U.S. restaurants need to brace for potential challenges. Staying informed and adjusting business strategies will be key to managing these rising costs.