Bookings of bakery flour expanded last week. Prices declined.
When wheat futures prices buckled in the aftermath of unexpectedly bearish U.S. Department of Agriculture production and supply-and-demand data released Jan. 12, several bakers filled gaps in February-March flour coverage and extended contract balances into April-June. The activity was seen in all grades. In the case of pan bread bakers, first-quarter 2010 coverage increased to more than 80%. Second-quarter coverage was estimated at about 30%.
The U.S.D.A. raised its forecast for the carryover of wheat in the United States on June 1, 2010, to 976 million bus, as it trimmed its forecasts for feed use of wheat and exports for the current year. June 1 wheat stocks this year, if the projection holds, would be the largest since 1988.
At the same time, the U.S.D.A.’s Winter Wheat Seedings report raised concerns about the 2010-11 supply of winter wheat, particularly soft red winter. The U.S.D.A. estimated all winter wheat area for harvest this year at 37.1 million acres, the smallest since 1913. While stocks of soft red winter wheat were ample on paper, widespread quality problems in the 2009 crop raised concerns over how much of soft red winter in storage was fit to mill. Soft red winter wheat planted area for this year was estimated at only 5.92 million acres, down nearly 30% from last year.
Cookie-cracker and specialty bakers and their flour suppliers discussed strategies for booking soft flour in what may prove to be a challenging 2010-11.
Bakers booked the millfeed component of prospective flour bookings out of concern millfeed prices would drop further given the 2009 corn crop estimate was raised to a new record. Most of this activity was for March and April-May. Some bakers were active in hedging in wheat futures their prospective flour bookings through May.
Mill grind increased to 5½ to seven days in both the Upper Midwest and Central states. Grain was five to 5½ days in the Southwest, 5½ in the Northeast and five in the Southeast. West coast mills ran five to six days with most at five.
Sales of national and regional brands of family flour were sluggish last week. Carlot list prices were unchanged.
Grocers continued to work down inventories left after the holidays, which kept new orders limited. No significant product promotions were evident.
Indications were category volume sales in December were up 0.9% from 2008, which was a good showing for a market that typically registers a 2% to 3% decline each year.
Buyers of private label earlier contracted supply to last them through March, and activity was centered on completing coverage through the end of the crop year.
Bookings of semolina, granulars and durum flour were limited last week. Prices declined.
Semolina prices declined 30c a cwt as cash durum prices eased and millfeed prices advanced. The cash price of choice milling hard amber durum in Minneapolis was $5.80 a bu, down 5c from a week earlier, with the weakness tied in part to the general softening seen in grain and oilseed prices in the wake of the bearish U.S. Department of Agriculture’s January production and supply-and-demand data.
The Canadian Wheat Board lowered its price of milling durum held in storage at Thunder Bay, Ont., to the equivalent of $6.10 a bu versus $6.15 a week earlier.
Individual pasta manufacturers filled gaps in March coverage. Manufacturers’ ownership of first-quarter 2010 needs was virtually complete. Durum millers estimated April-June semolina coverage at about 50%.
The U.S.D.A. in its supply-and-demand estimates released Jan. 12 left unchanged its forecast for the carryover of durum in the United States on June 1, 2010, at 40 million bus, which compared with 25 million bus in 2009. The pasta industry will have plenty of good-quality durum to work with through the end of the year.