Milling & Baking News - May 8, 2007 - (Page 1)

THE NEWS WEEKLY OF GRAIN-BASED FOODS MAY 8, 2007 / Tour participants forecast Kansas wheat crop at 393 million bus FEATURE Leadership in rice bran market NutraCea enjoys a controlling position on production of bran as a food ingredient Story on Page 22 KANSAS CITY - Participants on the 50th annual Hard Winter Wheat Evaluation Tour reported a better-than-expected crop despite damage from an Easter weekend freeze and forecast 2007 Kansas wheat production at 393 million bus. The forecast compared with the tour forecast last year of 319 million bus and actual 2006 harvest of 291 million bus. This year's forecasts ranged from a low of 300 million bus to a high of 501 million based on 447 stops on the tour. Participants said the worst freeze damage was concentrated in five or six counties in the central part of the state but that other parts of the state had better-than-expected yield pros- pects, especially to the west and north. Wide variations were noted in crop conditions and yield prospects across the state, from field to field, and even within a field, they said. "We don't realize how good the wheat is in western Kansas," said Ben Handcock, executive vice-president of the Wheat Quality Council, which sponsors the wheat tour. Prior to the freeze, some in the trade had forecast Kansas wheat production at 500 million bus or higher based on the best moisture supply in years and the largest planted area since the 2003 crop when production was 480 million bus. Drought plagued Kansas and much Continued on Page 30 LATE NEWS Kellogg income soars 17% to $321 million C.R.P. decision change urged BATTLE CREEK, MICH. - Net income in the first quarter rose 17% at The Kellogg Co., driven in part by innovations such as Chocolate Special K and the company's 100-calorie snacks. The improved earnings prompted Kellogg to raise its full-year earnings guidance to $2.70 to $2.74 per share, up from earlier estimates of $2.68 to $2.73. Net income in the first quarter ended March 31 was $321 million, equal to 81c per share on the common stock, up from $274 million, or 69c per share, in the same period a year ago. Net sales were $2,963 million, up 9% from $2,727 million a year ago. "Last year's momentum continued WASHINGTON - A coalition of 37 organizations representing a wide swath of U.S. agriculture has sent a letter to Secretary of Agriculture Mike Johanns seeking reconsideration of a March 30 decision not to allow penalty-free early release of Conservation Reserve Program acres. Warning that weather-related planting delays could reduce the size of the 2007 corn crop, the groups, including the National Grain and Feed Association, the Continued on Page 10 Ingredient Week Sponsored by Story on Page 34 in the first quarter of 2007," said David Mackay, chief executive officer. "Importantly, we posted these positive results while following our business model Net earnings per share $2.36 $2.51 $2.702.74* 2006 2007 $2.14 $1.92 $1.75 2002 2003 Source: Kellogg Co. 2004 2005 *Company guidance as of April 30 and making considerable investment in our brands, and in future growth." Operating profit at Kellogg North America rose 3% to $361 million on a 7% gain in net sales to $2,002 million. North America Retail Cereal posted internal sales growth of 4%, driven by brand building, recent innovation and a pricing action taken last year. "Special K Chocolate, Rice Krispies with Strawberries and Kashi GoLean Continued on Page 16

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Milling & Baking News - May 8, 2007