KANSAS CITY — At the risk of contradicting scriptural wisdom, one wonders how familiar King Solomon was with ingredient markets when he declared in Ecclesiastes, “There is nothing new under the sun.” Recent moves in cocoa and other markets have been extraordinary, and this publication’s chronicling of the often head-scratching and seemingly endless permutations of behavior exhibited by commodity markets is core to any explanation of how a business-to-business journal serving the flour-based foods industry just marked its 102nd anniversary.

Josh Sosland, editor of Milling & Baking News.
Source: Sosland Publishing Co. The ability of markets to surprise year after year also has sustained the Sosland Publishing Co. Purchasing Seminar for nearly half a century, and recent unsettling commodity market swings may explain why early registrations for the 2024 event are pouring in at a pace the company has never experienced.

What is particularly unusual this year is how dramatically many key markets are moving, but in opposite directions. While most grain and oilseed markets have tumbled from peaks set in the early 2020s, important specialty ingredient prices have been on fire. The divergence has left different segments of the food industry in a remarkably disparate position when it comes to ingredient cost positions and outlooks.

A sense of these disparities may be gained from the ingredient market indexes published by Milling & Baking News and Food Business News. The indexes include a look at ingredient cost changes for bread, bagels and shortbread cookies in the case of baked foods. The indexes are calculated based on ingredients contained in the products, weighted using standard formulas for the finished products. The index for white pan bread at the end of the first quarter was down 22% from the same date a year earlier. The widest drop posted was in the cake donut index, down 32%. For processed foods, the differences between indexes were wider. At one end, the frozen apple pie index was down 28% from a year ago while the milk chocolate bar index was up 15%.

Driving the decrease for grain-based foods was a sharp drop in flour prices. Basic bread flour prices at the end of March were $17.50 per cwt, down 26% from a year earlier. Among other factors pressuring the market are the best winter wheat crop conditions in three years. The flour price was right in line with the 10-year average flour price of $17.22 per cwt. Also putting pressure on the indexes were weak shortening prices, down 16% in the case of soybean oil.

At the other end of the spectrum, the 15% increase in the cost of chocolate bar ingredients captures a small fraction of what has transpired in the global cocoa market. The index is based on spot cocoa prices, up 40% from a year ago. Because of the supply chain process, cash cocoa price changes lag moves in futures prices, which were up 258% from a year earlier as of April 5. If the futures price move were fully reflected in the cash price, the chocolate bar index would be up more than 100%, rather than 15%. The gains have been attributed mostly to a cocoa bean shortage due to untenable production and marketing economics for cocoa growers.

Meanwhile, buyers of dairy and egg ingredients were on tenterhooks because of the spread of highly pathogenic avian influenza (HPAI) in laying chicken populations as well as in dairy herds for the first time, to say nothing about confirmation that humans have now been infected with HPAI. Prices for dairy and egg ingredients have not yet moved dramatically, but memories of soaring egg prices in recent years have left ingredient buyers nervous about what the future may hold.

Dramatic upward future moves in dairy and egg prices, and even cash cocoa prices are not a sure thing just as a bumper winter wheat crop is not yet in the bin and the corn, soybean and spring wheat crops mostly have yet to be planted. Still, dynamics that have emerged already in 2024 point to a fascinating and challenging year ahead in ingredient markets.