Milling & Baking News - March 23, 2004 - 36

I N G R E D I E N T

W E E K

Bakery Flour
Bookings of bakery flour were limited
last week. Prices surged higher.
A rally in wheat futures prices at midweek drove bakers and other flour buyers to the sidelines. Prices soared as the
World Food Programme bought 160,000
tonnes of U.S. hard winter wheat for Iraq
and issued another tender on behalf of
that country, this time for 630,000 tonnes
of optional-origin wheat. Additionally,
Egypt was a buyer of U.S. wheat. The
supportive export news ignited a run-up
in wheat futures prices, with heavy fund
activity amplifying the effect of the initial
buying enthusiasm.
Before the rally, bakers had been filling
in gaps in April coverage, with some extending contract balances into May-June.
In the case of pan bread bakers, AprilJune coverage was estimated at about
40% to 45% taken. Much of the business
in that market last week involved bakers
who already had taken some futures coverage through the second quarter and
decided to complete their bookings last
week as the cash basis seemed to be on an
upward trajectory. Some componentbuying bakers looking further ahead
locked in summer millfeed credits but
deferred the decision to book flour for the
summer until later.

Carlot Bakery Flour Prices

In the market for spring grades, there
were individual bakers willing to extend
contract balances through September. Distributors and other users of sacked flour
were active early in the week booking
what was required to keep contract balances extended 45 to 60 days. But sacked
business, too, dropped off after prices
scored impressive and unexpected gains.
Cookie-cracker and specialty bakers
also balked once prices began to surge
higher. Their coverage already was a bit
more extensive than that held by the
bread bakers.
Overall grind was disappointing last
week. Southwest mills ran five to 5½
days, although the average was closer to
five. In the Upper Midwest, mills came in
close to 5½. Central states, Buffalo and
adjacent eastern markets around 5½,
Southeast five to 5½. Grind in California
was five to six days, and the Pacific
Northwest averaged shade above five. MBN

Wheat Futures
Impressive price gains were scored in
wheat futures last week. Contracts
bounced back from recent losses on an
expansion in export demand for U.S.
wheat from an unexpected source.
Heavy buying by the commodity funds
amplified the support provided by the
increased export business.

Bakers Standard Patent, Kansas City

Bulk, f.o.b. car, $ per cwt

March 19 March 12

Year
ago

Kansas City
Bakers standard patent

11.20

10.60

9.95

Minneapolis
Spring standard patent
High gluten

11.35
13.60

10.80
13.05

10.70
12.20

Chicago
Cracker

11.50

10.85

9.60

Spring Standard, Minneapolis

Cracker Flour, Chicago

Bulk, f.o.b. car, $ per cwt

The United Nations World Food
Programme at the week's outset bought
160,000 tonnes of hard red winter wheat
for shipment to Iraq in the current marketing year. The W.F.P. also bought 110,000
tonnes of Australian wheat. The U.S. trade
had thought the W.F.P.'s tender would be
split between Argentina and Australia.
The W.F.P. subsequently sought offers on
628,000 tonnes of wheat, again for Iraq,
and ideas were that U.S. wheat would be
included in that pending purchase as well.
In addition to the Iraq business, Egypt
purchased 120,000 tonnes of U.S. wheat,
including 60,000 tonnes of soft red winter
wheat and 60,000 tonnes of soft white.
Export sales of 419,700 tonnes of wheat
for 2003-04 during the week ended
March 11 were within trade expectations.
Even with recent beneficial rain, overall crop conditions in the hard winter belt
remained worse than last year. In particular, western Nebraska and northeastern
Colorado and northwestern Kansas remained very dry, and this raised market
concerns, providing further fuel for last
week's price run-up.
Soybean futures prices rallied and
surged above the $10-per-bu mark last
week. Soybean futures were priced at the
highest levels since 1988. Corn futures
prices also advanced. But the gains in the
corn market were overshadowed by
strength in both soybeans and wheat. The
spread between Kansas City May wheat
and Chicago Board of Trade May corn
widened to 93c on Thursday last week
compared with 70½c at the end of the
week before. The spread between Chicago
May wheat and May corn widened to 86c,
compared with 63¼c at the end of the preceding week. The widening reduced prospects for wheat to be fed before harvest.
There was concern that the Prospective
Plantings report to be issued by the U.S.
Department of Agriculture on March 31
could reflect a loss in spring wheat acres
to soybeans and corn.
The spread between Minneapolis and
Kansas City wheat futures prices narrowed. In the case of the May contracts,
the spread narrowed to 26¾c last Thursday compared with 35¼c a week earlier.
Kansas City joined Minneapolis in establishing inverses in futures prices from
May to July. Chicago prices were flat from
May to July last Thursday. The collapse of
the carries reflected the market's need for
wheat to move now. MBN

Cash Wheat
HARD WINTER. Premiums on hard red
winter and dark hard wheat in Kansas
City were unchanged to 3c a bu higher
last week. Premiums on the lowest- and
highest-protein wheat were unchanged.
But premiums on wheat with 11.2%
36 / Milling & Baking News, March 23, 2004

bakingbusiness.com / world-grain.com

http://www.bakingbusiness.com http://www.world-grain.com

Milling & Baking News - March 23, 2004

Table of Contents for the Digital Edition of Milling & Baking News - March 23, 2004