Milling & Baking News - November 4, 2008 - (Page 1)

THE NEWS WEEKLY OF GRAIN-BASED FOODS NOVEMBER 4, 2008 / NEWS Wheat prices tumble with financial markets; uneasy prospects longer term Cereal and snack sales drive profit growth at Kellogg Story on Page 12 LATE NEWS I.B.C. gets go ahead to seek creditor approval KANSAS CITY - U.S. Bankruptcy Judge Jerry Venters on Oct. 30 approved a disclosure statement put forth by Interstate Bakeries Corp. that will allow the company to seek creditor approval of its reorganization plan and set the stage for the wholesale baker to emerge from bankruptcy protection. The reorganization plan will be mailed to creditors by Nov. 6 and must be voted on by Dec. 1. Mr. Venters has scheduled a confirmation hearing for Dec. 5, and if the plan is approved, attorneys for I.B.C. said the company would emerge from bankruptcy by Dec. 15. I.B.C., which filed for Chapter 11 bankruptcy Continued on Page 8 KANSAS CITY - How much further prices will decline remains unclear amid the unwinding of what in hindsight increasingly appears to have been a bubble in agricultural commodity prices. While analysts interviewed by Milling & Baking News were reluctant to forecast lows given the powerful downward momentum, they also warned that grainbased foods is not "out of the woods" regarding the adequacy of long-term supplies. As a result, the industry remains vulnerable to volatile swings in the years ahead. The freefall in world financial, equity and commodity markets combined with generally bearish supply-demand fundamentals to push wheat prices sharply lower since the Northern Hemisphere harvest. With world wheat production projected to set a new record in 2008-09 by a wide margin and wheat stocks in the United States and around the world increasing from the lowest levels in decades, wheat prices began tumbling from all-time highs set last winter even before the financial market meltdown began in mid-September. But once the plunge in financial markets and equity values occurred, wheat and other agricultural commodities seemed to be "joined at the hip" with those markets and may remain so until a semblance of stability emerges, veteran wheat market analysts said. "Commodity funds, traders and commercial buyers seem to look first to what is happening with the U.S. dollar, crude oil and the U.S. and world equity markets as indicators as to how they should trade agricultural commodities," said Paul Meyer, vice-president of commodity analysis, Connell Purchasing Services, Berkeley Heights, N.J. Mr. Meyer Continued on Page 19 Open outcry era to end at Minneapolis Grain Exchange MINNEAPOLIS - The 125-year era of open outcry trading of grain futures and options at the Minneapolis Grain Exchange (MGEX) is set to end Dec. 19 when the exchange moves exclusively to electronic trading. The move, which was approved recently by the MGEX board of directors but remains subject to MGEX ownership approval, for which ballots will be counted Nov. 18, means the exchange would operate exclusively through the CME Globex electronic trading platform. "The future is here," said Michael Walter, president of the Commodity Markets Council, an association of the nation's commodity futures exchanges. He said the move to electronic trading made tremendous sense for the MGEX and its members. "The trading community is successfully migrating to the electronic platform, and we are focused on providing greater MGEX operating efficiencies for Continued on Page 9

Table of Contents for the Digital Edition of Milling & Baking News - November 4, 2008


Milling & Baking News - November 4, 2008