Wheat Flour Prices Explained

Wheat flour prices fluctuated across regional markets as different weather patterns key producers. 

In Asia, China and India reported increased wheat production due to favorable weather conditions and government support policies, leading to a surplus in supply. Heavy rains and adverse weather conditions reduced the European wheat harvest, fueling wheat flour prices. 

The United States saw a mixed outlook with drought conditions affecting some areas while other regions benefited from increased acreage and higher yields. The overall balance between production and demand in North America is expected to keep prices relatively stable but with potential regional fluctuations.

Why are wheat flour prices fluctuating?

1. Wheat Prices

Wheat is the number one price fluctuation contributor to wheat flour as the raw material’s availability highly depends on the weather, disease outbreaks, or geopolitical issues. For instance, a ton of wheat cost $339.35 in the global market but after the Russia-Ukraine war broke out, it surged more than 100% (amounting to more than $450 per ton).

2. Production Costs

The price of wheat flour is determined by the costs of converting wheat into flour. This includes labor, energy, transportation, and overhead expenses. Variations in these manufacturing expenses may affect flour’s final cost.

For example, wheat fluctuates in price from $217 to $334 per metric ton as the freight costs from $39.50 to $86 despite the zero tariffs, according to DTI monitoring of wheat prices in recent years.

3. Supply and Demand

Like other commodities, the dynamics of supply and demand greatly influence the value of wheat flour. Demand stems from consumer behavior changes, dietary preferences, population increase, and food consumption.

For instance, wheat production is a key industry in Ukraine, Russia, and other former Soviet Union countries, therefore the Russian invasion of Ukraine had a significant effect on wheat supplies.

Approximately 25% of global wheat exports come from Russia and Ukraine. And the EU tariffs on Russian exports affected the global grain supply.

4. Climate and Weather

In the past years, there have been reports of record-high temperatures in several countries. Also, frequent forest fires are raging across Europe, the U.S., and Canada.

Moreover, the European Union, Russia, the United States, Canada, Ukraine, Pakistan, Australia, and Turkey reported wheat crop reduction (a total of 4%).

As a result, the Department of Agriculture in the U.S. projected that worldwide wheat production will decrease to 730 million metric tons from 758 million tons. This reduced output will translate to an increased wheat cost from $6 – $7 per bushel.

Which variables impact the price of wheat flour?

• Wheat Prices
• Production Costs
• Supply and Demand
• Climate and Weather
• Government Policies and Regulations
• Market Speculation
• Currency Exchange Rates
• Energy Prices

Where does wheat flour come from?

Wheat is a cereal grain that is cultivated in various regions worldwide. It is planted in fields and goes through a growth cycle that includes germination, vegetative growth, flowering, and maturation stages.

The wheat plants are harvested in the summer or fall (depending on the type and area) when they reach maturity. Utilizing combine harvesters (which chop the wheat stalks and separate the grains from the remainder of the plant) is a modern harvesting method.

Threshing is the process used to separate the wheat grains from the chaff (the outer husks) after harvesting. After that, the grains are cleaned from any last bits of dirt, straw, or other impurities.

After washing, the wheat grains are taken to mills and ground into wheat flour. Usually, there are multiple steps involved in the milling process:

1. Cleaning – The wheat grains are carefully washed from leftover contaminants or foreign materials.

2. Conditioning – Moisture is added to the grains to condition them and help soften the bran layers for easier separation.

3. Breaking – They are run through rollers to break the conditioned grains into smaller particles (such as the inner endosperm and outer bran layers).

4. Sieving – The broken grains are sifted through sieves to separate the bran and germ from the starchy endosperm.

5. Grinding – Several kinds of milling machinery (roller mills and stone mills) are used to grind the endosperm particles into fine flour.

Following the grinding of the wheat grains into flour, it is packaged and sent to bakers, consumers, food makers, and other end users in bags or other containers. After that, it is delivered to several marketplaces and retail locations for sale.

What are the uses of wheat flour?

Commonly used in numerous culinary applications, wheat flour is a staple ingredient in baking and cooking. Below are a few common uses for wheat flour:

1. Baking Bread – The main ingredient in bread is wheat flour. Bread can rise and develop a chewy texture because of the structure and elasticity provided by the gluten in it. Loaves, rolls, baguettes, and artisan bread are made with different varieties of wheat flour, including whole wheat flour, bread flour, and all-purpose flour.

2. Baking Pastries and Cakes – Numerous pastries and cakes, such as cookies, muffins, cupcakes, tarts, pies, and cakes are made with wheat flour. It gives baked items structure, texture, and volume.

3. Pasta – Pasta dough’s primary ingredient is wheat flour. It is mixed with eggs and occasionally water to form a silky dough rolled out and molded into ravioli, lasagna sheets, spaghetti, and fettuccine.

4. Breading and Coating – Foods are coated with wheat flour before being fried or baked. It gives the end product a golden brown color and a crispy texture and aids in retaining moisture. Fried chicken, fish filets, onion rings, and vegetables are frequently breaded.

5. Sauce and Gravy – A thickening agent for sauces, gravies, soups, and stews. Its starch gelatinizes when it comes into contact with liquid and heat, thickening and smoothing the combination.

What is the future price of wheat flour?

Several trends shape the wheat flour market. The clean-label movement emphasizes transparency and natural ingredients, leading to surging whole-grain inquiries. Consumers are increasingly looking for products with fewer artificial additives and more recognizable ingredients.

Additionally, the rising popularity of baked goods due to growing interest in home baking and artisanal bread drives the demand for high-quality wheat flour. The bread and bakery products hold the largest market share of wheat flour by application and are projected to grow at a CAGR of 6.3% by 2028.

These factors combined translated to higher wheat flour prices as suppliers strived to meet the rising demand while maintaining the quality standards expected by consumers.

On the restraint side, the increasing popularity of gluten-free foods affects the wheat flour market. As more people are diagnosed with gluten sensitivities or celiac disease, the market for gluten-free alternatives expanded rapidly.

This shift stabilized wheat flour consumption as people turned to gluten-free flours made from rice, almond, coconut, and other non-wheat sources. This trend not only shapes the demand for wheat flour but encourages innovation in the food industry as manufacturers develop new products to cater to this growing segment.

Overall, the Global Wheat Flour Market is expected to reach $308.7 billion by 2030, with a wheat flour price ranging from $1.08 to $1.52 per kilogram.