A fair viewing of the progress of the harvests this season exhibits stability, and that even with the flooding in the US Midwest and variable weather in other regions such as Montana and the Pacific Northwest, the total harvest is turning out to be of good volume and quality from the US. Other regions of the world are also showing strong harvests. As of the day of the writing of these comments, we have seen seven straight days of considerable drops in price of wheat. Consistent with the explanations of the global food market in my prior article “Food Cost – US and World Trends as Predictors of What is to Come” , although some of the wheat and feed grains are exported from each country and some are not, prices are set by global demand and availability.

The world crop for wheat this season is in fact turning out to be a record harvest, yielding a surplus that can be used to replenish inventories and/or soften price. In addition to wheat, globally maize (corn) production is up as is barley. From August 22 until August 29 prices on the global market have come down on US wheat, corn and EU barley. The price of Thai 100% Grade B Rice has stayed steady.

US Hard Red Winter HRW price as an example neared $375 free on board price at the Gulf (Gulf of Mexico) in late June and is now trading under $337. US corn topped out near $320 in late June and is now trading at $250 and soybeans topped out near $630 in early July now trades at $504. The world has the ability to produce and move commodities.

The purpose of this series of articles is to provide a view of why food costs vary, how to have reasonable expectations concerning ingredients as major expenses in the food production business, and what decisions we will need to debate in the future to hold the cost of food as a cost of doing business hopefully stable and low. If food companies can learn to understand these market cycles descried in this series, a much better understanding of food costs and the ability to predict, purchase and plan can be developed.