Wheat futures prices had been steadily rising in July to finally break the $6-dollar range this week. With the exception of Tuesday, prices on the MGEX closed in the $7 range for Sept. 10 every day this week, including an upswing to Thursday's settlement of $7.83.
The biggest culprit of this price upswing is a recent announcement by the Russian government that the country would ban grain exports through December, due to a recent drought. Russia is currently the third largest exporter of wheat in the world.
The announcement and prices have caused major news media outlet to alert the public to potential bread and pizza price scares, like this one from CNNMoney:
If prices resume their upward trajectory, you could wind up paying 25% to 30% more for a loaf of bread and at least 10% more for a pizza by the end of August or early September, said Darin Newsom, a senior analyst at Telvent DTN, an agriculture and commodities information company.
But Kyle Schrad, a grain expert with FCStone firm, doesn’t think it’s time for the industry or consumers to panic for the long term – yet. He says there’s still plenty of volatility in the market. After all, prices reached a low in June.
"There are enough stocks out there globally that you could sure see prices come back down and realign themselves with the corn and soybean markets," he said. “Wheat's tough because it’s a feed grain, and the one that humans eat, which makes it all that more volatile."
He did admit that the seesaw prices are likely in the short term, until the harvest starts in September, when he expects the prices to ease.
"Right now it's a mixed bag, because we are locked in, but things could flip on a dime," he said, citing a 60-cent dropoff of the MGEX Sept. 10 settlement price from Thursday to Friday.