As the Greek government announced price cuts on 1,740 products for a two-month period on August 31, the country’s largest flour mills were delivering a very different message to their customers. Industrial food manufacturers and artisan bakeries were informed that flour prices would rise by 40 euros per tonne, an increase of roughly 10%, setting the stage for fresh inflationary pressure on everyday staples.
The increase stems from mounting disruptions in global grain markets. As previously reported by OT, Russian attacks have severely damaged Black Sea ports, cutting off a key export route for Ukrainian grain. At the same time, dangerously low water levels on the Danube have sharply reduced river transport capacity, with barges carrying only a fraction of their usual cargo before grain can be transferred to ships at Romania’s Port of Constanța.
Adding to the pressure, drought across Europe has damaged harvests, prompting grain holders to delay sales in anticipation of even higher prices.
The price rally has been swift. Wheat on the French commodities exchange traded at 203 euros per tonne when the Middle East conflict erupted in February. It quickly climbed to 230 euros, reached 256 euros only days ago, and then eased slightly to 248 euros.
Rising transport costs have compounded the problem, alongside higher packaging expenses. Of the latest 40euros-per-tonne flour increase, around 10 euros reflects higher freight costs, while the remaining 30 euros is linked to increased production costs.
According to sources, Greece remains self-sufficient in durum wheat, but this year’s poor-quality harvest is forcing pasta makers to import higher-grade grain from Canada, where prices are around 3.30 euros per kilogram compared with 2.60 euros for Greek wheat. As a result, pasta price increases are becoming increasingly likely.
For flour-dependent industries such as industrial bakeries and biscuit manufacturers, the impact may come later, as many annual supply contracts expire in the final quarter of the year. Once those are renewed, higher retail prices are expected to follow.
For Greece’s artisan bakeries already hit by high energy costs, a 10% rise in flour prices could be the tipping point, making higher bread prices increasingly likely.
