Milling & Baking News - July 18, 2006 - (Page 1)

Theinewsweeklyiofigrain-basedifoods JULY 18, 2006 / 2007 wheat carryover forecast raised; hard wheat supply tight WASHINGTON - The Economic Research Service of the U.S. Department of Agriculture on July 12 raised its projection of the carryover of wheat on June 1, 2007, to 438 million bus, up 22 million bus from the June forecast but down 130 million bus, or 23%, from 568 million bus as the 2006 carryover. The increase from the June projection was attributed to a higher estimate of the nation's June 1, 2006, wheat inventory based on the U.S.D.A.'s Grain Stocks report issued June 30. Even with the increase from June, the 2007 wheat carryover was projected to be the smallest since 376 million bus in 1995-96. The July data included the U.S.D.A.'s first wheat supply/demand estimates by class, which indicated tightening stocks of hard winter wheat, hard spring wheat, white wheat and durum from 2005-06, and an increase in soft red winter wheat stocks. In the case of hard winter wheat, 2006-07 supply and the 2007 carryover were projected at the smallest levels in decades. Beginning stocks of all-wheat for the current year were estimated at 568 million bus, up 21 million bus from the June number. Beginning stocks of hard red winter wheat were raised 14 million bus from the Continued on Page 17 Little particles, big benefits Global industrial use of grains seen soaring 14% in 2006-07 LONDON - Propelled almost entirely by expanding output of ethanol in the United States and China, industrial use of grains has become the fastest growing sector of global grain demand, the International Grains Council said in its latest Grain Market Report. The I.G.C. calculated that industrial use of grains has risen at an annual average rate of 9% in the past five years, contrasted with food and feed demand gaining only 1% per year and largely track- LATE ing the increase in world population. Even that 9% average annual expansion is being overshadowed by the I.G.C. forecast that industrial use in the crop year that has just begun, 2006-07, will expand by a record-breaking 14% over the previous year. The Council's projection of industrial use of all grains for 2006-07 was 186 million tonnes, compared with 163.6 million in the prior season and 147.9 million Continued on Page 34 NEWS Frito-Lay, Quaker units strong in Q2 PURCHASE, N.Y. - The Frito-Lay unit of PepsiCo Inc. again delivered strong profit and sales growth in the second quarter ended June 17. Operating profit of Frito-Lay North America was $634 million, up 7% from $555 million in the second quarter last year. Sales were $2,567 million, up 8%. Salty snack volume performance was helped by doubledigit gains in dips and variety packs, and over 20% growth Continued on Page 10 inside Story on Page 21 Kraft Foods to acquire United Biscuits units for $1.07 billion NORTHFIELD, ILL. - Kraft Foods Inc. said it will acquire the Spanish and Portuguese operations of United Biscuits, a move that also will return to Kraft the rights to all Nabisco trademarks, including Oreo and Ritz, in the European Union, Eastern Europe, the Middle East and Africa. This transaction, which is expected to close in the third quarter, will be approximately 2c accretive to earnings per share during the first year of ownership, Kraft said. In taking on the Spanish and Continued on Page 13 THIS WEEK Guenther acquires Morrison Milling 12 Mid-year review of HFCS market 14 Ingredient Steve Bresky elevated at Seaboard 37 Week sponsored by 38

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Milling & Baking News - July 18, 2006