Bookings of bakery flour were light last week. Prices advanced.
Early-week strength in wheat futures prices were the principal factor pushing flour prices higher through midweek. As futures prices turned lower Thursday, flour price gains were trimmed.
Bakers returned to offices after the long holiday weekend mostly comfortable with flour pipelines and ownership for the first quarter of 2010. Bread bakers in the weeks before the holiday break covered between 70% and 80% of their prospective flour needs for the quarter, and cookie-cracker and specialty bakers held that level of coverage or even greater in many instances.
Most of last week’s activity involved bread bakers filling gaps in January-March coverage and some soft flour users extending contract balances into April-May. Bakers who book flour through component buying hoped wintry weather and plummeting temperatures across the eastern two-thirds of the nation would translate into increased demand for millfeed, which might moderate deferred flour quotes.
Buyers of spring grades and hard winter-spring blends discussed with millers the impact of the change in calculating and posting the cash spring wheat basis. Since Jan. 4, the cash spring wheat basis was posted as a delivery Chicago/beyond value. Many flour contracts were negotiated using the previously posted basis that reflected the value of wheat traversing Minneapolis to destinations beyond.
Also of concern to bakers using spring grade flour were ongoing difficulties involved with sourcing a sufficient and consistent supply of flour milled from wheat providing good stability. Flour milled from this year’s spring wheat crop has provided less stability than in most recent years.
Mills in the Southwest ran five to 5½ days, Upper Midwest mills averaged six and Central states operated five to six. Northeast and Southeast mills ran five days or less. West coast mills averaged about five days.
Sales of national and regional brands of family flour were light last week. Carlot list prices were unchanged.
With the winter holidays in the past, family flour volume reverted to the routine. Grocers seemed intent on working down inventories, which made for particularly subdued post-holiday activity. Typically, family flour sales remain modest until the approach of Easter, when home baking increases.
December and 2009 volume data were expected soon. It was thought they would confirm observations that indicated a year-over-year expansion from 2008.
In the market for private label flour, which fared remarkably well in 2009, most major buyers earlier contracted flour supply for the first quarter of 2010 with many holding ownership of their needs through old crop.
Bookings of semolina, granulars and durum flour were light last week. Price changes were narrow.
The price of choice milling hard amber durum in Minneapolis held at $5.85 a bu with quotes ranging from $5.75 to $6.05 a bu. The Canadian Wheat Board offered milling durum held in storage in Thunder Bay, Ont., at the equivalent of $6.15 a bu, down 10c from the previous week. The C.W.B. move was seen as a response to the recent downward trend indicated in U.S. cash durum prices. Trading in the spot market was lacking.
Durum mill grind increased to seven days at many points, and grind was expected to remain heavy during the next few weeks. This was viewed as an auspicious start for the new year after mill operations and shipments slowed in December from the previous brisk pace. The year 2009 was an outstanding year for durum and semolina business with pasta sales advancing. It was thought the weak economy encouraged consumers to prepare more meals in the home and increase purchases of staple foods, such as pasta products.