As Wheat Futures Retreat To $8.75, Price Spike & Shortages Go Global - LA Times

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From pastries to pasta, the price of just about everything made with wheat is going up. Blame the trend on a biblical bout of bad weather -- drought, freezes and floods -- that has decimated wheat crops and created shortages around the world.

Wheat futures hit a record of $8.87 a bushel in Chicago trading last week before retreating to $8.75 on Monday. Still, that's a huge jump from $3.95 a year ago. "This is a historic level. There is no way we can cut costs fast enough or deep enough to handle this type of huge increase in wheat," said Bill Nictakis, president of the fresh bakery division at Sara Lee Corp.

Sara Lee raised the prices of its own bread and bagels by 5% last week, and the cost of what it bakes for the private labels of retailers by 6% to 7%.

And it's not just Sara Lee and its customers who are feeling the pinch. Shoppers in Rome are threatening pasta boycotts to protest rising prices. In Lanzhou in western China workers are complaining about paying more at the industrial city's 3,000 noodle shops. And in the United States, parents are shelling out more for all the Wonder Bread and Hostess Twinkies that are stuffed into school lunchboxes. The run-up is cutting into the profits of bakers such as Charles Feder. He buys about a ton of flour each week for his Rossmoor Pastries in Signal Hill, which counts Universal Studios, Walt Disney Co. and dozens of restaurants, hotels and country clubs among its clients. "It used to be $7.50 for a 50-pound bag. Now it is approaching $11 and I am told it will go even higher," Feder said.

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http://www.latimes.com/business/la-fi-wheat18sep18,0,4412837,full.story