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The food staple that's about to cost you more

Bread prices are set to jump as the cost of Australian wheat surges following adverse weather conditions across the country.

Following a dry spell with higher heat, future contracts, which guarantee a set price for a period of time, have rocketed over the past six months on the east coast for wheat.

“Australian wheat exports, which are the third largest in the world, have come under some pressure lately on the back of elevated temperatures and lower rainfall,” CommSec economist Ryan Felsman told Sunrise.

“The Eastern Australian futures contract for the price of wheat has risen by 27 per cent over the last six months and thats certainly put pressure on breads and wheat prices in particular.”

Bread prices across Australia are poised to rise following a prolonged stint of detrimental weather. Source: AAP, file.
Bread prices across Australia are poised to rise following a prolonged stint of detrimental weather. Source: AAP, file.

The lasting effect of the drought looks set to cause a significant drop in wheat growth over the next year, with produce levels set to be the worst in over a decade.

“The estimated production of wheat is likely to fall by about 12 per cent over the course of the next 12 months to around 22 million tonnes and that would be the lowest in 11 years,” Felsman said.

And those predictions are only getting worse as the National Australia Bank lowered its forecast for local wheat output to “a shade under” 20 million tons from 21.3 million tons just four weeks earlier, citing “very tough” conditions for its recalculation, Bloomberg reported.

According to Felsman, the 11 million Australians who buy bread each week could be in for a shock.

With an El Nino weather pattern predicted by the Bureau of Meteorology, which could cause further disruptions, Felsman joked that bread consumers “may need to resort to a paleo or a low carb diet”.