Consumers will continue paying more on wheat products for the remainder of the year as bakers say the cost will not drop this October as earlier projected, signalling a costly Christmas.
Even though the cost of wheat at the international market has dropped to a low of $390 a tonne, processors say the supplies that they are getting at the market were purchased in April at higher rates of $540 a tonne.
The bakers say the contracts that were entered in April, for the crop that was delivered in August were based on the prevailing higher prices at the height of the Russian-Ukrainian war that impacted negatively on prices.
“Prices will not come down now because the wheat that we are getting currently is what we bought at an exorbitant cost in April and this is what will reflect on the cost of flour at least up to January next year,” said Bimal Shah, managing director at Broadways Group of Companies.
Processors normally do futures orders to be certain of the availability of the commodity throughout the year.
Mr Shah said the high price of wheat products such as bread was due to costly fuel, especially diesel which they use in running their ovens. Diesel prices declined marginally by Sh2 in this month’s review to retail at Sh146.9 a litre. The price of a two-kilo wheat flour packet has remained at a high of Sh200 on average from a low of Sh150 at the beginning of the year. The cost of 400 grammes of bread has hit Sh60 from a low of Sh50 in January.
Bakers’ plan to increase the cost of bread in September was thwarted by supermarkets, which kept the cost of their in-house bread low with 500g selling at Sh58.
Kenya received the first ship of wheat from Ukraine on Tuesday, marking the maiden consignment since the war broke out. The country has mainly been receiving wheat from Canada, Australia, and Latvia.
The price of wheat started skyrocketing at the end of February after Russia invaded Ukraine, cutting the supply of produce from the two countries after the Black Sea — the main corridor for the passage of grain.