Milling & Baking News - November 17, 2009 - (Page 1)

THE NEWS WEEKLY OF GRAIN-BASED FOODS NOVEMBER 17, 2009 / Grain Market Roundtable NEWS Wheat prices rise even as U.S. and world supplies grow From high-tech to organic milling, Dakota Prairie Organic expands Story on Page 28 LATE NEWS Flour output down, but total still near record WASHINGTON - Flour production in July-September totaled 107,607,000 cwts, down 0.5% from 108,175,000 cwts in the third quarter of 2008, according to the Census Bureau of the U.S. Department of Commerce. It also was down 1.3% from 109,017,000 in the third quarter of 2007, which was the largest for the third quarter on record and the second largest for any quarter. U.S. milling 24-hour capacity in the third quarter of 2009 was 1,534,000 cwts, up 1,000 cwts from the second but down 9,000 from a year back. Mills in July-September operated at 91.1% of six-day capacity, up from 87.2% in the second quarter and Continued on Page 8 KANSAS CITY - The world has plenty of wheat, and supplies in the United States itself are bountiful. Growers worldwide demonstrated during the past couple of years that when prices are high and weather permits, wheat production may be increased dramatically even from one year to the next. But despite the largest U.S. wheat supply since 2001-02 and no significant supply concerns in the rest of the world, U.S. wheat futures prices have found it difficult to break and hold below $5 a bu as wheat fundamentals proved to be but one feature, albeit the most important feature, of a mix that influences prices. On any given day, those trading wheat must weigh wheat supply and demand factors against myriad other influences often demanding equal or even greater attention, including the value of the U.S. dollar, the price of crude oil, the direction of equity markets, the status of the U.S. and world economies and the attitudes and strategies of new categories of market speculators. "When I started in this business, everything revolved around supply and demand," remarked Steve Freed, vicepresident, ADM Investment Services Chicago. Mr. Freed said in the 1990s, people started to speak more about technical trading and money less connected to underlying supply and demand began to flow into the market. "Then in 2006 and 2007, we brought in a whole new crowd of investors that really doesn't know much at all about the market's fundamentals." Today, a wheat Continued on Page 23 With strong quarter, Flowers upbeat about 2010; headwinds aplenty THOMASVILLE, GA. - Net income of Flowers Foods Inc. in the third quarter ended Oct. 10 was $31,926,000, equal to 34c per share on the common stock, up 17% from $27,415,000, or 29c, in the same quarter in 2008. Net sales were $602,570,000, up 4.6% from $575,937,000. "I am pleased with the sales, operating margins and earnings results we delivered in the face of continued pressures from the overall economy, the competitive landscape and higher promotional activity in the bakery category," said George E. Deese, chairman, chief executive officer and president. "Our sales results were mixed as our direct-store-delivery business took action to protect our market share through promotions while our warehouse business achieved higher snack cake sales, improved pricing/mix and benefited from acquisitions." Acquisitions were the largest contributor to the 4.6% sales growth, accounting for 4.2 percentage points with pricing/mix reflecting another 1.4 points partly offset by a negative 1 point from volume decline. "Overall, the volume declines occurred primarily in the non-retail channel, specifically in the food service, vending and Continued on Page 9

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Milling & Baking News - November 17, 2009