K.C. millfeed soars on Hostess fallout
Nov. 28, 2012
by Laura Lloyd
KANSAS CITY — Nearby prices for truck and rail delivered millfeed in the Southwest region were up sharply Wednesday, and traders said the gains reflected cutbacks in flour grind at mills that lost business related to the liquidation of Hostess Brands, Inc. Traders added that catch-up on flour grind was not as brisk as expected after the Thanksgiving holiday break, when most facilities were down at least two days.
A trader in Kansas City said flour grind was five days this week rather than the 6½ days that would be normal at this time of year. As a result, millfeed supplies have grown much tighter and prices were reflecting the current scarcity.
In a market where a $10-a-ton daily move is significant, truck-delivered millfeed prices in Kansas City gained $15 a ton Wednesday and were up $23 a ton, or 11%, since last Friday. Rail values through December were up $10 a ton on Wednesday and were up $15, or 8%, so far this week.
The gains stood out in a market that, before the Hostess liquidation, had been relatively quiet in recent weeks as traders waited for demand to perk up as temperatures cooled and livestock producers needed additional manufactured feed. This demand remained elusive and prices stayed mostly steady or gradually softened over a number of weeks.
Nothing seemed to be able to spur the market higher since the summer drought, when prices reached historic highs. As recently as earlier this week, Southwest traders contended herd culling during the summer may have put feed demand on a long-term lower trajectory.
The current situation hasn’t affected just the Southwest; some supplies have been shipped west from Kentucky and the Southeast, a trader said. Prices in Chattanooga, Tenn., which have been steady and the lowest in the country recently, firmed $5 a ton Wednesday. Other locations, though, seemed relatively unaffected. The Upper Midwest posted modest gains Wednesday of $3@5 a ton and Central states prices were mostly steady.