Milling & Baking News - May 6, 2008 - (Page 1)

THE NEWS WEEKLY OF GRAIN-BASED FOODS MAY 6, 2008 / FEATURE At Washington hearing, baker calls commodity situation 'perilous' per bus Major U.S. grain/soy futures prices $26 $24 $22 $20 $18 $16 $14 $12 $10 $8 $6 $4 $2 July 2007 (Nearby future settlement price) Oats Soybeans Rice (per cwt) Minneapolis wheat Chicago wheat Kansas City wheat Corn Aug. Sept. Oct. Nov. Dec. Jan. 2008 Feb. Mar. Apr. Grain and Milling Management C.F.T.C. turns cautious on changes that may increase speculative pressure on markets Story on Page 29 LATE NEWS Flour output revised up for 2007 and 2006 WASHINGTON - Production of flour by U.S. mills in 2007 was revised upward by 1,262,000 cwts from preliminary numbers in the "Flour Milling Products: 2007 Summary" issued May 2 by the Census Bureau of the U.S. Department of Commerce. At the newly-revised 418,836,000 cwts, flour production in 2007 was up 15,445,000 cwts, or 3.8%, from revised output of 403,391,000 cwts in 2006. Running time in 2007 averaged 88.9% of sixday capacity, up from 87.5% in 2006 and 86.2% in 2005. The 2006 revision raised production 3,531,000 cwts, or 0.9%, from 399,860,000 in the 2006 summary issued a year ago. With the Continued on Page 8 WASHINGTON - "Explosive price increases for just about every commodity we use have created a perilous situation that threatens our ability to continue doing business," said Richard Reinwald, owner, Reinwald's Bakery, Huntington, N.Y., on Long Island. In May 1 testimony before a Congressional Joint Economic Committee (J.E.C.), Mr. Reinwald painted a bleak picture of the baking ingredient situation and its impact on bakers and consumers. He called for congressional action Reinwald to ease the burden through changes in the ethanol program. The hearing was convened by Senator Charles Schumer of New York. Mr. Schumer said he hoped the hearing would help determine how rising food costs are affecting American families and what steps could offer relief. For the baking industry, the hearing offered the largest stage yet for the group to air its views on rising prices and government action it is seeking. A fourth-generation retail baker of pies, bread and cookies as well as birthday and wedding cakes, Mr. Reinwald represented the Retail Bakers of America, McLean, Va., and the American Bakers Association, Washington. His remarks were supplemented with supporting comments prepared by the baking groups for the J.E.C. Elaborating on the "perilous" situation, Mr. Reinwald told the committee that the cost of a 100-lb bag of flour has risen to $52 from $17 in 2006 and that soybean oil and egg prices have doubled in the past year. "Our bowl cost, or the cost of dough coming out of the mixing bowl, went from 22c per lb to 51c per lb for rye bread," Mr. Reinwald said. "Rye flour, used to make the best part of a deli rye sandwich, has not only doubled but is now in short supply, and we are Continued on Page 11 Soaring fuel prices driving up shipping costs as winter wheat harvest approaches KANSAS CITY - While myriad issues, including regional container shortages and flooding along portions of the Mississippi river, currently dog the shipping industry none loom larger in 2008 than fuel prices. Record high crude oil prices, and resulting record high diesel and gasoline prices, have driven up costs for all types of shipping, from truck and rail to barge and ocean freight. Most of those higher costs ultimately will be passed on to shipping consumers, including grain companies as the winter wheat harvest fast approaches. The U.S. average on-highway diesel price for the week ended April 28 was the highest ever at $4.177 a gallon, up 3.4c from a week earlier and up $1.366, or 49%, from $2.811 last year, the Energy Information Administration of the U.S. Department of Energy said last week. The average price for retail gasoline was $3.603 a gallon, up 9.5c from a week earlier and up 63.2c, or 21%, from a year ago, the E.I.A. said. As a result, it will cost more to move grain by rail this season as both freight rates and fuel surcharges are up from a year ago. "Shipping rates in the South are higher, but the increases are dwarfed by what's Continued on Page 21

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Milling & Baking News - May 6, 2008