KANSAS CITY — Logistics challenges, labor shortages and rising prices have been themes for much of 2021 in the food industry, from growers to retailers. How that will change in 2022 remains to be seen, but market outlooks suggest high prices and other challenges may be around for a while.

The “cost of COVID” to some extent was brought home in Dec. 14 inflation data from the Bureau of Labor Statistics that showed the November Producer Price Index (which measures prices at the wholesale level) up 9.6% from a year ago, above analysts’ expectations of a 9.2% increase and the largest annual increase in records that started in 2010. On Dec. 10 the Labor Department said the Consumer Price Index in November jumped 6.8% from a year earlier, the largest increase since June 1982.

Price increases in the food sector have been obvious for some time with most ingredient values well above year-earlier levels. Mid-December prices for refined cane sugar were up 31% from a year earlier, for butter they were up 43%, for dried egg yolk were up 51%, for food-grade oat flakes were up 65% and for semolina (pasta flour) were up about 140%. Many ingredient price increases were less dramatic, but few were below year-ago levels.

On the raw commodity front, prices for wheat, corn and soybeans already had begun to move higher in 2020 and then were magnified by drought conditions during the 2021 growing season in some cases.

The March corn future in Chicago in mid-December was up about 40% from a year earlier and the January soybean future was up about 10%. March wheat futures were up about 30% in Chicago, were up about 40% in Kansas City contracts and were up about 80% in Minneapolis.

The sharp gains in Minneapolis spring wheat futures mainly were the result of severe drought across the major spring wheat growing regions of the Upper Midwest and the Canadian Prairies, which also affected durum wheat and oats.

The cash price of durum wheat (the raw material for semolina) was quoted by Milling & Baking News at $18.75 per bu in mid-December, up 125% from December 2020 and down slightly from the 2021 high of $19.50 per bu in early September, which was the highest in seven years. The price of cash oats quoted by Milling & Baking News topped $8 per bu in late November, up about 133% from a year earlier and the highest in records back to the mid-1990s.

Sharp price gains in ingredient prices, coupled with higher materials, labor and freight costs help explain the surge in food price inflation and contribute to the overall rising inflation trend. Many analysts see the trend continuing at least through the first half of 2022, with easing freight congestion and rates not expected to moderate or improve until the second half of the year.

Futures prices would tend to support the views that high prices will persist.

Domestic raw sugar futures (No. 16 contract on ICE Futures US) were trading above 37¢ a lb through September with May through September contracts above the nearby March price. New crop sugar futures (November forward) were near 33¢ a lb. Refined cane sugar on the cash market is offered at 49¢ a lb from January forward, down from a multi-year high of 55¢ a lb late this year but well above pre-COVID levels in the mid-to-upper 30¢ range.

Old crop corn futures were trading just below $6 a bu through July, compared with pre-COVID values around $4 a bu. Winter wheat futures (Kansas City and Chicago contracts) were about flat through March 2023 although Minneapolis spring wheat futures from September 2022 forward were about $1 per bu below spot through May 2022 values, indicating expectations for a better spring wheat crop in 2022. Soybean futures prices were modestly above nearby levels for the second half of next year.

For the major commodities, much will depend on area planted, export markets and weather, but current numbers point to continued firm pricing for some time.