Milling & Baking News - August 14, 2007 - (Page 1)

THE NEWS WEEKLY OF GRAIN-BASED FOODS AUGUST 14, 2007 / FEATURE Ethanol production builds as corn prices slide, oil prices climb and debate grows 2007 farm bill: Act two Story on Page 12 LATE NEWS Second-quarter flour output at 8-year high WASHINGTON - Flour production by U.S. mills in April-June 2007 rose to 102,089,000 cwts, up 5,036,000, or 5.2%, from 97,053,000 cwts in the second quarter of 2006. It was the secondlargest output for April-June on record, topped only by the second quarter of 1999, at 103,463,000 cwts. The 24-hour capacity of U.S. mills in April-June was 1,527,000 cwts, up from 1,499,000 a year back. Mills in April-June operated at 86.8% of six-day capacity, up from 84.1% in the second quarter of 2006. Output in the first six months of 2007 aggregated 201,885,000 cwts, up 3.8% from 194,532,000 in the first Continued on Page 8 KANSAS CITY - While the seemingly endless debate over the use of corn as a primary feed stock for ethanol goes on, corn prices have dropped significantly this summer, crude oil prices hit record highs and ethanol production capacity continues to ramp up. The U.S. Congress also has hotly debated energy issues, with the House approving energy and energy-related tax bills in a rare Saturday session Aug. 4 just before leaving for its summer break. The Senate passed its version of new energy legislation in June. What the final outcome of the two bills will look like will be up for debate after Congress reconvenes. President George W. Bush, meanwhile, has indicated he would veto any bill that did not address energy security or high energy prices. While the 2005 Energy Policy Act remains in place, the new legislation had several renewable energy features. The Senate bill would require use of 36 billion gallons of ethanol by 2022 and that half of all new cars made by 2015 must be able to run on E-85, a blend of 85% ethanol and 15% gasoline. The House version includes tax credits for stations that install E-85 pumps, but does not set a minimum use requirement for ethanol. Much of the debate in the House focused on a separate bill that would impose $16 billion in new taxes over 10 years on oil companies by removing certain tax breaks. The Senate had no such tax provisions. The Senate bill would require cars, sport utility vehicles and small trucks to average 35 miles per gallon by 2020, a 40% Continued on Page 20 Weston Foods income up sharply; will focus on growing Northeast business TORONTO - A renewed focus on branded products combined with an improved cost structure helped drive a 100% gain in operating income at Weston Foods in the second quarter ended June 16. Going forward, the company plans to up its presence in the Northeast. Operating income of Weston Foods was C$112 million ($105.2 million) during the second quarter, up sharply from C$56 million in the same period last year. Weston Foods sales were C$1,004 million, up 1% from C$999 million. Overall volume at Weston Foods decreased by approximately 2.2% for the second quarter of 2007 with approximately 1.1% of this volume decline attributable to the combined effect of the exit from the U.S. frozen food service bagel business early in the third quarter of 2006 and the discontinuance of contract manufacturing of biscuits for certain customers during 2006. Restructuring and other charges during the quarter were C$7 million, which compared with income of C$10 million in the second quarter of fiscal 2006. Weston Foods also incurred Continued on Page 14

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Milling & Baking News - August 14, 2007