Although it may be too soon for the falling prices to be reflected in national inflation statistics, some of them are starting to work their way through to Americans' wallets. Last week, for example, King Arthur Flour reduced the prices on four grades of its product by 15 percent. On April 1, the company, which makes premium flour, had increased prices by 46 percent. "That price increase did not cover the difference in our costs," says Michael Bittel, senior vice president and general manager of the Norwich, Vt., company. Nevertheless, King Arthur Flour went ahead with a price decrease. "We were hoping the price would come down and we could pass that reduction back to our customers," Mr. Bittel says.
Good conditions for growing crops are partly why the grain markets have dropped in price, says William Lapp, president of Advanced Economic Solutions in Omaha, Neb. "We've had frequent rain events and no persistent heat to affect yields, so the crop is off to a decent start," says Mr. Lapp, adding, "But the questions remain: Will we have a long enough growing season since it's been cooler than normal, and how much of the crop was drowned out this spring?"
On Tuesday, some of the questions will be answered when the US Department of Agriculture (USDA) gives its first official crop report. "Usually they are accurate to within about 5 percent of the crop estimate," says Lapp, a former chief economist at ConAgra Foods.