Food Business News - December 20, 2011 - 47

Ingredient Markets
Market commentary for one-week period ended December 16, 2011

Cash Wheat
HARD WINTER. Premiums on hard red winter wheat in Kansas City plunged 17@41c a bu in the case of ordinary wheat and wheat with protein from 11% through 13.2%. The basis on wheat with protein of 13.4% through 13.8% was unchanged and was only lightly tested compared with the rest of the protein scale. Premiums on 14% protein dropped 15c at the week’s end. Mills pulled back from plentiful spot offers that greatly exceeded demand. Mills were receiving timely shipments of wheat for application against December wheat contracts. Buyers earlier purchased large volumes of supply for delivery in both December and January, and shipments against these contracts recently were heavy. Mills also considered their needs in view of operations downtime scheduled for the last two weeks of the year because of the winter holidays. Into this market ﬂush with wheat, elevators loaded and shipped supply in response to the still historically strong cash wheat basis. But with the approach of the holidays and indications pipelines could not absorb more wheat, there were indications some elevators were beginning to cancel rail car orders. Gulf exporter bids on hard winter wheat also began to soften. Most of the wheat in transit already was sold by producers and owned by elevators. Fresh farmer selling was limited with producers chagrined with prices much lower than those that prevailed a few weeks earlier. Premiums across the high end of the protein scale continued to derive support from ongoing substitution of hard winter wheat for more expensive spring wheat by several mills. Even with the cash hard red spring wheat basis pressured at the week’s end, the price spread between spring

wheat and hard winter wheat remained wide. Substitution of hard winter wheat for spring wheat to the extent practicable was expected to be a market feature for the remainder of the crop year. Recent moisture has beneﬁted crop condition across the region, including drought areas. A meteorologist addressing members of the Kansas City Board of Trade forecast an active weather period beginning with a storm that will bring additional precipitation to the hard winter wheat region early this week with Kansas and all of Oklahoma and Texas likely to see a quarter-inch to one inch of moisture. Snow may fall across northernmost areas; otherwise, moisture will be in the form of rain or a wintry mix as temperatures were expected to be average to above average during these days. The moisture was welcome and the drought area may begin to contract, but Texas sources indicated considerably more precipitation was needed to replenish drought-drained subsoil moisture. HARD SPRING. Premiums on hard red spring wheat quoted as delivered Chicago/ beyond values in relation to the Minneapolis March wheat future were unchanged to 5c a bu higher last week. Wheat movement slowed from the previous couple of weeks, but the pace was brisk enough to keep the cash wheat basis under pressure in view of the reduced mill runtimes scheduled for the last two weeks of the year. Demand for spring wheat remained constrained by the substitution by some

mills of less expensive hard winter wheat for spring wheat of equivalent protein. The spread between the unload-inMinneapolis rail wheat freight rate and the delivered Chicago/beyond rate remained 15c a bu. SOFT RED. Mill bids on soft red winter wheat were ﬁrm. In Kansas City, No. 1 soft red bids were 66c under K.C. March to 6c under, unchanged. Gulf bids on soft red for December advanced 10c a bu and were at 55c over Chicago March. St. Louis mill bids declined 5c a bu and were at 15c over Chicago March. Chicago mill bids were unchanged at the Chicago March price; new crop, 30c under July. Mill bids in Toledo for nearby were 30c over Chicago March, up 10c; new crop, 30c over July. Elevator bids were 12c under Chicago March; new crop, 35c under July. Cincinnati nearby mill bids were unchanged at 25c under Chicago March. Elevator bids for nearby were 39c under Chicago March; new crop, 25c under July. Michigan white wheat mill bids for nearby were at 10@30c over Chicago March. The U.S. Department of Agriculture ﬁeld ofﬁce in Ohio rated the state’s winter wheat condition as of Dec. 11 at 44% good to excellent (39% a week earlier), 40% fair (46%) and 16% poor to very poor (15%). The ﬁeld ofﬁce in North Carolina indicated winter wheat emergence in that state was 87% compared with 72% a week earlier and 71% as the recent ﬁve-year average for the date. Wheat condition in the state was rated 82% good to excellent, 17% fair and 1% poor. FBN

No. 1 hard spring
Basis Minneapolis March, delivered Chicago/beyond cents per bu Dec. 16 — Change from — Year Premium Dec. 9 Dec. 2 ago Ordinary ... ... ... … 11% ... ... ... … 12% ... ... ... -50 @ -25 13% 70 @ 75 … -30 @ -25 -5 @ 10 13.5% ... ... ... 60 @ 100 14% ... ... ... 125 14.5% ... ... ... 160 @ 230 15% 160 @ 180 0 @ +5 0 @ +5 265 @ 350 16% ... ... ... …

Cash wheat
Dec. 16 — Change from — For shipment Bid Dec. 9 Dec. 2 No. 1 Soft White, Track, Portland $ per bu September ... ... ... January 5.90 — -.15 February 5.92 — -.15 No. 1 Hard 11.5%, Track, Portland Basis Kansas City future, cents per bu September 0.50 — — January 0.50 — — February 0.52 — — No. 1 Spring 14%, Track, Portland Basis Minneapolis future, cents per bu September 1.35 -.05 -.05 January 1.40 — — February 1.40 — — Year ago

No. 1 hard winter
Basis Kansas City March, cents per bu Dec. 16 Premium Ordinary 45 @ 60 11% 45 @ 60 11.2% 55 @ 70 11.4% 59 @ 74 11.6% 65 @ 80 11.8% 70 @ 85 12% 75 @ 90 12.2% 75 @ 90 12.4% 77 @ 92 12.6% 90 @ 105 12.8% 100 @ 115 13% 100 @ 115 13.2% 100 @ 115 13.4% 120 @ 135 13.6% 120 @ 135 13.8% 135 @ 150 14% 160 @ 175 — Change from — Dec. 9 Dec. 2 -17@ -17 -17 @ -17 -20@ -20 -17 @ -17 -20@ -20 -7 @ -7 -31@ -31 -35 @ -35 -32@ -32 -36 @ -36 -38@ -38 -39 @ -39 -41@ -41 -45 @ -45 -41@ -41 -45 @ -45 -43@ -43 -43 @ -43 -30@ -30 -37 @ -37 -20@ -20 -27 @ -27 -20@ -20 -30 @ -30 -20@ -20 -33 @ -33 — -13 @ -13 — -18 @ -18 — -10 @ -10 -15@ -15 -25 @ -25 Year ago -47@ -32 -43@ -28 -40@ -25 -35@ -20 -25@ -10 -20@ -5 0@ 15 0@ 15 0@ 15 0@ 15 3@ 18 20@ 35 25@ 40 30@ 45 35@ 50 35@ 50 35@ 50

… … 7.40 … -0.10 0.00 … 1.50 1.50

Exporter bids and offers
For Dec. 16 shipment Bid Offer No. 1 Hard 12%, Track Gulf Basis Kansas City future, cents per bu December +108 March … January +108 March 115 February … March 115 March … … No. 2 Soft Red, c.i.f. New Orleans Basis Chicago future, cents per bu December +55 March … January +55 March 65 February +60 March 68 March +63 March 68 Year ago bid

Canadian domestic milling wheat
… +56 March … … Change from Year In-store, Thunder Bay, Dec. 16 Dec. 9 ago Canadian $ per tonne Western red spring 13.5% 372.63 +.71 354.14 Soft white spring 259.55 +.92 301.31 Amber durum 496.20 +3.31 353.39 U.S. $ per bu Western red spring 13.5% Soft white spring Amber durum 9.76 6.80 13.00 -0.16 -0.10 -0.15 9.52 8.10 9.50

+65 +65 +60 +60

March March March March

December 20, 2011

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Food Business News - December 20, 2011

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