Milling & Baking News - March 9, 2004 - 32

I N G R E D I E N T

W E E K

Bakery Flour
Bookings of bakery flour were steady
last week. Prices were lower.
There was business done each day, particularly when there were dips in wheat
futures prices. But as has been the case for
the past few weeks, most bookings aimed
at filling in gaps in March coverage. Some
bakers also added some coverage in April.
But most remained reluctant to book significantly past March-April.
Wheat futures prices declined in the
absence of fresh export purchases by
China and with much-welcomed rain
that seemed finally to have broken the
grip that drouth has had on the western
portions of the hard winter wheat belt for
months. At the same time, cash wheat
premiums have risen, at least in Kansas
City and in the Central states, which provided a partial offset. Millfeed credits remained relatively high.
Wheat futures analysts have projected
declining wheat prices even while acknowledging additional wheat sales to
China and continued strength to corn
and soybean prices could limit downside
potential. Bakers long ago had seen flour
prices exceed their budget expectations
and were reluctant to commit to large forward bookings if there was a chance that
prices could break from current levels

Carlot Bakery Flour Prices

during the next several weeks.
In the market for pan bread flour, fillins for March and April were the rule.
April-June coverage was estimated at
about 35%, little changed from the week
before, with most of that coverage in
April. In the market for spring grades,
there was ongoing contracting with distributors and other sacked flour users,
particularly in the Northeast, who
bought what was required to keep contact balances extended 30 to 45 days.
The market for soft flour was mostly
quiet, with most cookie-cracker and specialty bakers holding more extensive coverage into the second quarter than the
bread bakers.
Flour mill grind appeared to pick up
slightly at least in certain regions. Southwest mills continued to operate close to
five days, and Northwest units averaged
close to the five-day mark. Central states
mills ran around 5½ days, while Buffalo
and adjacent eastern points came in a
shade over five. Southeast mills ran five
to 5½ days. California and the Pacific
Northwest were up to six days. MBN

Wheat Futures
Wide declines were sustained in wheat
futures prices last week. The preceding
week had seen wheat prices on the three
futures exchanges advance on heavier-

Bakers Standard Patent, Kansas City

Bulk, f.o.b. car, $ per cwt

March 5

Feb. 27

Year
ago

Kansas City
Bakers standard patent

10.70

10.90

10.20

Minneapolis
Spring standard patent
High gluten

11.20
13.45

11.65
13.90

11.05
12.55

Chicago
Cracker

11.05

11.45

9.90

Spring Standard, Minneapolis

Cracker Flour, Chicago

Bulk, f.o.b. car, $ per cwt

than-expected Chinese wheat purchases
for both old crop and 2004-05. In the absence of continued Chinese buying last
week, markets were freed to respond to
improving conditions for both the U.S.
and European winter wheat crops.
Conditions for the winter wheat crops
in the European Union and the Former
Soviet Union remained favorable. Near
record world wheat production has been
forecast for the upcoming year, barring a
severe weather event this spring in one or
more of the principal Northern Hemisphere growing regions. U.S. production
was forecast to be lower than a year ago
because of a smaller planted area and
ideas that yields would be down from
last year's record levels. The increase in
the world crop next year would translate
into stronger competition in world import wheat markets and probably lower
U.S. exports.
In the remaining months of the current
marketing year, the U.S. will encounter
increased competition from Australia
and Argentina, both of which harvested
large crops. Egypt has been a recent
heavy buyer of Australian wheat. A rallying U.S. dollar also was making U.S. offers less attractive. Export shipments will
have to be consistently strong in order for
U.S. exports to reach the current projection of 1,050 million bus in 2003-04.
Drouth-breaking rain fell across the
Southwest last week. While there remained areas that were very dry, their expanse was shrinking. Improvements were
indicated in wheat conditions in Texas
(from last week, although most of the crop
in that state remained in poor condition),
Oklahoma (from last month) and Nebraska. Kansas wheat condition ratings
deteriorated slightly in February, but recent and forecast rains were expected to
improve condition ratings this month.
Declines in wheat prices were widest on
the Chicago Board of Trade and the Kansas City Board of Trade. The Minneapolis
Grain Exchange registered less severe
price declines, as spring wheat competed
with corn and soybeans for planted acres.
In fact, the declines in the spring wheat
market nearly matched those in corn futures prices on the C.B.O.T. last week.
The spread between Kansas City and
Minneapolis wheat futures prices remained about 40c a bu last week. MBN

Cash Wheat
HARD WINTER. Premiums on hard red
winter and dark hard wheat in Kansas
City advanced 3@6c a bu last week. It
seemed that most mills and other wheat
buyers required at least minimal supply
to shore up pipelines. Some mills faced
more urgent needs, and their buying
helped pull the market higher. Demand
32 / Milling & Baking News, March 9, 2004

bakingbusiness.com / world-grain.com

http://www.bakingbusiness.com http://www.world-grain.com

Milling & Baking News - March 9, 2004

Table of Contents for the Digital Edition of Milling & Baking News - March 9, 2004