Milling & Baking News - September 11, 2007 - (Page 1)

THE NEWS WEEKLY OF GRAIN-BASED FOODS SEPTEMBER 11, 2007 / FEATURE Wheat futures prices at all-time highs amid unprecedented tightness Over the top: North Dakota Mill stands alone as nation's largest flour mill Story on Page 20 LATE NEWS Big G cereals spur sales growth at General Mills MINNEAPOLIS - Thanks in large part to a boost in Big G cereals sales, General Mills, Inc. last week said it expects to report good sales and earnings per share gains for its fiscal 2008 first quarter when it issues complete first-quarter 2008 results on Sept. 19. General Mills said sales growth for the period ended Aug. 26 is expected to exceed the company's long-term target of low single-digit growth, while first-quarter earnings per share are expected to be 81c, including previously announced restructuring expenses of $13 million pre-tax. The results would compare with net sales Continued on Page 10 KANSAS CITY - Wheat futures prices soaring to all-time highs dealt body blows to bakers' budgets and left all of grainbased foods in a quandary over how to manage risk through what promises to remain a tumultuous marketing year. The cutting edge of the storm wracking wheat markets was the tightest world wheat supply when measured against demand in records extending back to 1960-61, the first year for which such data are available. The U.S. Department of Agriculture on Aug. 10 projected the 2007-08 world wheat ending stocks-touse ratio at 18%. It's never been tighter. The International Grains Council on Aug. 23 provided the most recent snapshot of world wheat supply and demand for 2007-08. The I.G.C. projected 2007-08 world wheat production at 607 million tonnes, down 7 million tonnes from its July forecast but up 16 million tonnes from 591 million tonnes in 2006-07. The projected increase in production from a year ago falls well short of demand. The I.G.C. projected world wheat consumption in 2007-08 at 614 million tonnes, up 4 million tonnes from the previous year and 7 million tonnes more than the world was projected to produce. Trade in wheat was projected at 107 million tonnes, unchanged from the July forecast and down 4 million tonnes from 2006-07. The I.G.C. projected 2007-08 world wheat ending stocks at 111 million tonnes, down from an already excruciatingly tight 117 million tonnes held in Continued on Page 26 Bread Industry Perspective X Time for a change? For an industry as "staid" as commercial baking, the pace of change currently is extraordinary. From formulation innovations and product mix shifts to distribution systems and steadily evolving consumer perceptions, change is evident in many key facets of the baking business. Current indications suggest no let- up in the changes in how the leading baking companies come to market and with which products. Against this backdrop, unit volume trends remain soft while dollar sales have been strong. In recent data from Information Resources, Inc., all five of the top five fresh bread vendors sustained a downturn in unit sales in the 52-week period ended July 15, but four of the five achieved a rise in dollar sales, with the exception being Interstate Bakeries Corp. The fresh bread category is now a $6 billion category, according to I.R.I., and is unlikely to slow if Continued on Page 33

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Milling & Baking News - September 11, 2007