Weekly Flour Comment
BakingBusiness.com, December 8, 2009
by Jay Sjerven

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Bakery Flour

Bookings of bakery flour expanded modestly last week. Prices declined with the widest losses applying to pan bread flour and spring grades. Soft flour price changes were minor.

Soft flour prices were approaching those of bread flour. Chicago wheat futures prices began trading at a premium to Kansas City contracts a couple of weeks ago and were nearly on par with Minneapolis futures prices. Mill bids on soft red winter wheat have firmed while cash premiums on hard spring wheat and hard winter wheat have been under pressure.

The relative firmness of the soft wheat market partly reflected the tightness in the supply of milling quality wheat because of widespread incidence of scab in the 2009 crop. Additionally, soft red winter wheat area for harvest in 2010 was expected to be much smaller than in 2009. Many cookie-cracker and specialty bakers in response to these conditions earlier extended contract balances well into 2010. Last week, some of these buyers continued to cover the futures component of prospective flour bookings as far forward as the fourth quarter of 2010.

Bread bakers filled gaps in December coverage and made small additions to their first-quarter 2010 coverage, which was estimated at about 40% to 50%. Individual bakers also booked futures and basis components of prospective flour transactions extending through old crop and even into the third quarter of 2010. Flat pricing was minor.

Activity in the market for spring grades was similar to that in the pan bread market. There was additional futures and basis coverage taken into 2010.

Recent price weakness in millfeed made it less attractive to bakers assembling components of flour contracts.

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

Family Flour

Sales of national and regional brands of family flour were seasonally brisk last week but slower than the pre-Thanksgiving buildup. Carlot list prices were unchanged.

It was expected shipments will begin to fall sharply in the next couple of weeks once grocers’ needs for the year-end holidays are filled. After the holiday rush, sales and shipments were expected to revert to the routine.

Family flour on promotion continued to be offered on grocery shelves at about $2 per 5-lb bag.

It has been a good year for family flour sales with most months indicating year-to-year gains in volume compared with steady annual declines that long have been the rule in the market.

Semolina

Bookings of semolina, granulars and durum flours were light last week. Prices advanced 15c a cwt.

The price of choice milling hard amber durum held at $5.90 a bu with trading in the spot market lacking. Durum mills were comfortable with grain being supplied on contract and didn’t press for spot offers. The Canadian Wheat Board offered milling durum held in store in Thunder Bay, Ont., at the equivalent of $6.25 a bu.

Pasta manufacturers were satisfied with coverage that for most extended through the first quarter of 2010. April-June semolina coverage was estimated at 30% to 40%. With large and good-quality crops harvested in both the U.S. and Canada, semolina buyers exhibited little concern that prices might dash higher.

Durum mill grind was six days after a short schedule during the previous holiday-shortened week. Semolina shipments have slowed in the past few weeks, but even if December shipments prove to be as slow, 2009 has been an outstanding year for the pasta industry.

Statistics Canada on Dec. 3 estimated Canadian durum production in 2009 at 5,399,600 tonnes, up 333,400 tonnes, or 7%, from the September forecast of 5,066,200 tonnes, but down 119,400 tonnes, or 2%, from 5,519,000 tonnes in 2008.


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