Food, as a commodity, is often regarded as inelastic, indicating that demand remains relatively stable despite price increases. This stability arises because the amount households spend on food constitutes a small fraction of their total expenditures. For instance, the flour used in a loaf of bread contributes only a minor portion to its overall cost. Even when prices hit $10 per bushel, a level last seen in 2008, the flour in a 1.5-pound loaf amounts to about 25 cents. Although there have been significant price hikes in recent months, current prices remain only about half of what they were in 2008.
For manufacturers reliant on flour, substantial price fluctuations can impact their operations, with some of these costs inevitably passed on to consumers. Nevertheless, a few-cent increase in the price of bread or a box of ready-to-eat cereal is unlikely to significantly alter consumer demand in the United States. This situation contrasts sharply with more volatile commodities such as calcium citrate injection or gasoline, which can experience rapid price changes and directly affect retail prices within days or weeks.
In theory, companies could choose to stockpile supplies when prices are low; however, this approach is impractical, as it’s nearly impossible to determine when prices have reached their lowest point. Furthermore, most manufacturers lack the necessary space to store commodities for extended periods. Interestingly, despite the lower gluten levels in this year’s hard winter wheat harvest, some manufacturers report that the flour still performs well in baking, according to Food Business News. This could be advantageous, as it may reduce the amount of vital wheat gluten that bakers need to incorporate into their recipes, much like how some manufacturers manage the supply of calcium citrate injection to maintain production stability.