Milling & Baking News - June 16, 2009 - (Page 1)

THE NEWS WEEKLY OF GRAIN-BASED FOODS JUNE 16, 2009 / NEWS NEWS FEATURE Freight costs fall with lower fuel prices; tonnage drops due to sluggish economy Kellogg planning to add fiber to ready-to-eat cereal Story on Page 12 LATE NEWS Bimbo sells bonds to refinance loans MEXICO CITY - Grupo Bimbo S.A.B. de C.V. said it has placed 10 billion pesos ($732 million) in the local debt market to refinance existing loans, including the bridge loan obtained for its January 2009 acquisition of the U.S. fresh bakery business of Weston Foods, Inc. The public offering - Bimbo's first in seven years - consisted of three issuances, including 5 billion pesos of five-year floating-rate debt; 2 billion pesos of seven-year fixed-rate debt; and 3 billion pesos of seven-year inflation-indexed notes. The company's share price opened June 11 - the day after the Continued on Page 8 KANSAS CITY - With increasing agreement that the recession is bottoming and that conditions will begin to improve in the second half of 2009, bulk and container freight demand, which often is a leading indicator of a turn in economic activity, is being closely watched. But through the first five months of the year, freight demand has shown little, if any, signs of improving. Truck tonnage, a key indicator of economic activity because trucks move about 70% of domestic tonnage carried by all modes of freight transportation, fell to its lowest level in April since November 2001, as measured by the American Trucking Associations' For-Hire Truck Tonnage Index. April 2009 tonnage was down 13.2% from April 2008, the largest year-over-year decrease in 13 years, the A.T.A. said. "While most key economic indicators are decreasing at a slower rate, the year-over-year contractions in truck tonnage accelerated because businesses are right-sizing their inventories, which means fewer truck shipments," said Bob Costello, chief economist for the A.T.A. "The absolute dollar value of inventories has fallen, but sales have decreased as much or more, which means that inventories are still too high for the current level of sales. Until this correction is complete, freight will be tough for motor carriers." The association's seasonally adjusted index stood at 99.2 (2000 = 100) in April, down 2.2% from March (which was down 4.5% from February) and was the lowest since November 2001. The April not seasonally adjusted index, which represents the change in Continued on Page 21 Bakers seek carefully crafted approach to food safety reform WASHINGTON - Strong views on a wide range of food safety issues were expressed in a June 9 letter from the American Bakers Association to a congressional committee considering actions designed to make the nation's food supply safer. While applauding the focus of the House Committee on Energy and Commerce on enhancing food safety, the letter expressed concern about a wide range of measures under consideration, including facility registration fees to cover the cost of extra Food and Drug Administration funding, country-of-origin labeling (COOL), so-called pedigree standards for ingredients and increased government access to records. Additionally, the letter expressed support for a "rigorous, reliable and uniform thirdparty certification system" and a riskbased approach to food safety. The letter was submitted by Robb MacKie, president and chief executive Continued on Page 30

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Milling & Baking News - June 16, 2009