Milling & Baking News - November 17, 2009 - 1

THE NEWS WEEKLY OF GRAIN-BASED FOODS
NOVEMBER 17, 2009

bakingbusiness.com / foodbusinessnews.net

Grain Market Roundtable
NEWS

Wheat prices rise even as U.S.
and world supplies grow

From high-tech to organic
milling, Dakota Prairie
Organic expands
Story on Page 28

LATE NEWS

Flour output down, but
total still near record
WASHINGTON - Flour production
in July-September totaled 107,607,000
cwts, down 0.5% from 108,175,000
cwts in the third quarter of 2008, according to the Census Bureau of the
U.S. Department of Commerce. It
also was down 1.3% from 109,017,000
in the third quarter of 2007, which
was the largest for the third quarter
on record and the second largest for
any quarter. U.S. milling 24-hour capacity in the third quarter of 2009 was
1,534,000 cwts, up 1,000 cwts from the
second but down 9,000 from a year
back. Mills in July-September operated at 91.1% of six-day capacity, up
from 87.2% in the second quarter and
Continued on Page 8

KANSAS CITY - The world has plenty of wheat, and supplies in the United
States itself are bountiful. Growers
worldwide demonstrated during the
past couple of years that when prices
are high and weather permits, wheat production
may be increased dramatically even from one year
to the next. But despite the
largest U.S. wheat supply
since 2001-02 and no significant supply concerns in
the rest of the world, U.S.
wheat futures prices have
found it difficult to break
and hold below $5 a bu as wheat fundamentals proved to be but one feature, albeit the most important feature,
of a mix that influences prices.
On any given day, those trading wheat
must weigh wheat supply and demand
factors against myriad other influences

often demanding equal or even greater
attention, including the value of the U.S.
dollar, the price of crude oil, the direction
of equity markets, the status of the U.S.
and world economies and the attitudes
and strategies of new categories of market speculators.
"When I started in this
business, everything revolved
around supply and demand,"
remarked Steve Freed, vicepresident, ADM Investment
Services Chicago. Mr. Freed
said in the 1990s, people
started to speak more about
technical trading and money
less connected to underlying supply and
demand began to flow into the market.
"Then in 2006 and 2007, we brought in
a whole new crowd of investors that really doesn't know much at all about the
market's fundamentals." Today, a wheat
Continued on Page 23

With strong quarter, Flowers upbeat
about 2010; headwinds aplenty
THOMASVILLE, GA. - Net income of
Flowers Foods Inc. in the third quarter
ended Oct. 10 was $31,926,000, equal
to 34c per share on the common stock,
up 17% from $27,415,000, or 29c, in the
same quarter in 2008. Net sales were
$602,570,000, up 4.6% from $575,937,000.
"I am pleased with the sales, operating
margins and earnings results we delivered in the face of continued pressures
from the overall economy, the competitive

landscape and higher promotional activity in the bakery category," said George
E. Deese, chairman, chief executive officer and president. "Our sales results
were mixed as our direct-store-delivery
business took action to protect our market share through promotions while our
warehouse business achieved higher
snack cake sales, improved pricing/mix
and benefited from acquisitions."
Acquisitions were the largest contributor to the 4.6% sales growth, accounting for 4.2 percentage points with pricing/mix reflecting another 1.4 points
partly offset by a negative 1 point from
volume decline.
"Overall, the volume declines occurred
primarily in the non-retail channel, specifically in the food service, vending and
Continued on Page 9

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Milling & Baking News - November 17, 2009

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