Weekly Flour Comment
BakingBusiness.com, November 17, 2009
by Jay Sjerven

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Bakery Flour

Bookings of bakery flour were limited last week. Prices surged higher.

With wheat futures prices surging in defiance of wheat supply/demand fundamentals, frustrated bakers were mostly on the sidelines. It formerly was a rule of thumb that when the U.S. Department of Agriculture raised U.S. wheat ending stocks, as it did on Nov. 10, wheat prices would come under pressure, even if only temporarily. But wheat markets largely shrugged off the government report and continued to rally in response to a mix of outside influences that exerted more sway over wheat markets than the bearish fundamentals.

With advancing wheat futures prices discouraging flat pricing, bakers turned their attention to components. Several cookie-cracker and specialty bakers covered the millfeed and cash basis components of soft flour bookings extending into the first and second quarters of 2010. In instances where bakers already owned futures coverage, the activity completed flour bookings. One miller said he was urging buyers of flour milled from both hard winter wheat and soft wheat to book basis through old crop. In the case of soft wheat, this was an especially important tactic, he said, given the quality problems in the old crop and expectations plantings for the new crop would be well below last year.

Volatility in the cash spring wheat market kept spring grade users from shifting to a more active stance in regard to adding to first-quarter 2010 ownership. Most activity during the week involved filling gaps in November-December coverage.

In the market for pan bread flour, coverage was nearly complete for November-December and about 50% taken for January-March, reflecting little change from the previous week.

Mill grind was 5½ to six days in the Southwest, 5½ days in the Upper Midwest, six days in the Central states, 5½ to six days in the Northeast, 5½ days in the Southeast and six days plus on the West coast.

Family Flour

Sales of national and regional brands of family flour were seasonally brisk. Carlot list prices were unchanged.

With Thanksgiving just a couple of weeks away, manufacturers indicated several buyers pressed for expedited shipments to meet seasonal demand and to support advertising campaigns that proved more successful than expected.

October was a strong month for the category, with sales up 10% from a year ago, according to one market analyst. For the full year, though, data were less impressive. Another market analyst indicated category volume in the 52 weeks ended the last week of October was down 0.67%. But in a category typically experiencing annual decreases of 2% to 3%, the slim decline from a year earlier was seen as an industry plus. Private label manufacturers were thriving with their 52-week volume up more than 9% from the year-earlier span.

Semolina

Bookings of semolina, granulars and durum flour were limited last week. Prices advanced.

The price of choice milling hard amber durum in Minneapolis moved up 10c, to $5.80 a bu, although some quotes were higher and others lower. With trading of durum on the spot market lacking, it was difficult to pin down values. The Canadian Wheat Board continued to offer milling durum held in store in Thunder Bay, Ont., at the equivalent of $6.15 a bu.

That the large U.S. and Canadian crops haven’t exerted greater pressure on prices was frustrating to pasta manufacturers. Pasta makers held extensive coverage including about 75% of their first-quarter 2010 needs and 25% to 30% of their second-quarter needs. They were reluctant to extend contract balances much further in anticipation that ultimately prices would weaken.

Semolina shipments declined from recent weekly volume with millers pointing to seasonal factors. But for the year, semolina sales remained buoyant reflecting strong consumer demand for pasta in a weak economy.


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