Why Australian chicken, beef and bread prices are set to increase despite heavy rainfall

Australians are set to pay more for common groceries items like chicken, beef and bread despite some of the heaviest rainfall in more than 100 years, a market expert says.

This is because global wheat futures prices are at the highest level since November 2012 and grain is needed to feed livestock or make flour.

So while heavy rainfall in Australia pushes up crop yields, many other parts of the world are now in drought.

Russia, the world’s biggest wheat exporter, is considering raising grain export taxes as Canadian farmers battle a big dry that has caused their annual wheat output to plunge by 38 per cent.

A global shortage of wheat leads to increased prices, which means Australian farmers want to sell more of their produce overseas to boost their earnings and make up for the lean times of Australia’s long drought that ended in 2020.

Markets like Saudi Arabia are particularly keen to pay top dollar for much-needed wheat. 

Jessica Amir, an Australian market strategist with Saxo Capital Markets, said more expensive wheat prices would make chicken, in particular, dearer.

Australians are set to pay more for common groceries items like chicken, beef and bread despite some of the heaviest rainfall in more than 100 years, a market expert says

Jessica Amir, an Australian market strategist with Saxo Capital Markets, said more expensive wheat prices would make chicken dearer. So while heavy rainfall in Australia pushes up crop yields, many other parts of the world are now in drought - with wheat futures at a nine-year high

Jessica Amir, an Australian market strategist with Saxo Capital Markets, said more expensive wheat prices would make chicken dearer. So while heavy rainfall in Australia pushes up crop yields, many other parts of the world are now in drought – with wheat futures at a nine-year high

‘The most expensive part of raising a chicken is the wheat price, so it makes up about 80 per cent of the price of a bird,’ she told Daily Mail Australia.

‘You’re going to see upward pressure on the price of poultry because the price of growing a bird is going to increase.

‘Food inflation is definitely real – just look on the supermarket shelves, you’re seeing the price of chicken is higher, the price of beef, pork.’

Poultry prices on world markets have climbed by 24 per cent since the start of 2021, which flows through to consumers as farmers negotiate with supermarket chains to get the best deal. 

A 2.5kg organic, whole chicken at Woolworths now costs $31.25. 

In the year to September, beef and veal prices have risen by 10.9 per cent, a level more than triple the headline inflation rate of 3 per cent, Australian Bureau of Statistics data showed.

‘For some of those, unfortunately, live by paycheque to paycheque, they might find it a little bit more challenging,’ Ms Amir said.

The Bureau of Meteorology on Tuesday officially declared that cooler La Niña ocean currents would see eastern Australian drenched with above-average rainfall this summer.

Orange in the New South Wales Central West has already seen its highest monthly rainfall since records began in 1870 with a total of 243.2mm recorded as of Tuesday – and there’s still one week left of November.

Russia is considering raising grain export taxes as Canadian farmers battle a big dry that has caused their annual wheat output to plunge by 38 per cent (pictured is a wheat crop in Canada's Manitoba province)

Russia is considering raising grain export taxes as Canadian farmers battle a big dry that has caused their annual wheat output to plunge by 38 per cent (pictured is a wheat crop in Canada’s Manitoba province)

Wheat growing town Condobolin copped 131.7mm of rain in 24 hours while Cowra, a meat processing town, was drenched with 173.2mm.

Ms Amir said agribusinesses were set to be the biggest beneficiaries of surging wheat prices, including the Australian Agricultural Company, Elders and GrainCorp, which are all listed on the Australian Securities Exchange.

‘It’s ultimately the prices of these commodities that are pushing up the stocks as well,’ she said.  

‘Investors also invest in these stocks and that creates momentum.

‘Traditionally, agricultural companies tend to also outperform in periods of high inflation.’

The Bureau of Meteorology on Tuesday officially declared that cooler La Niña ocean currents would see eastern Australian drenched with above-average rainfall this summer (pictured is flooding at Gunnedah in northern New South Wales)

The Bureau of Meteorology on Tuesday officially declared that cooler La Niña ocean currents would see eastern Australian drenched with above-average rainfall this summer (pictured is flooding at Gunnedah in northern New South Wales)

Read more at DailyMail.co.uk

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