Milling & Baking News - August 17, 2004 - 31

I N G R E D I E N T

W E E K

Bakery Flour
The pace of bakery flour booking last
week slowed. With wheat futures prices
resuming a downward trend amid upward
revisions in the U.S. Department of
Agriculture's projections for both wheat
and corn production, most bakers believed
they could stand aside for awhile in the
hope that prices would drop further still.
New contract lows were set in wheat
futures prices. Many bakers had taken initial October-December flour coverage at
prices sharply higher. Before committing
to additional physical ownership in the
fourth quarter, they seemed intent on
riding the market as far down as it was
likely to go.
But bakers were far from inactive. Declining wheat futures prices, especially
following the U.S.D.A. reports, generated heavy hedging in wheat futures,
with bakers covering positions as far forward as May.
Bread bakers were put off by historically strong cash wheat premiums in
both Minneapolis and Kansas City. They
expected the spring wheat harvest eventually to begin to bring pressure to bear in
Minneapolis. And they were hopeful that
the prospect of large fall crops across the
Plains states would encourage producers
to increase their hard red winter wheat

Carlot Bakery Flour Prices

Chicago
Cracker

Wheat futures prices sustained wide
losses and set new contract lows on the
three exchanges of Kansas City, Chicago
and Minneapolis. The Chicago Septem-

Bulk, f.o.b. car, $ per cwt
Aug. 6

Year
ago

9.80

10.10

10.80

9.60
11.85

10.25
12.50

10.75
11.75

9.30

9.75

11.05

Aug. 13

Minneapolis
Spring standard patent
High gluten

Wheat Futures

Bakers Standard Patent, Kansas City

Bulk, f.o.b. car, $ per cwt
Kansas City
Bakers standard patent

sales, making more wheat available to the
market and opening the way for a weaker
cash basis in Kansas City.
While some business was done each
day, when the week ended, there was no
reason to increase estimates of OctoberDecember bread flour coverage beyond
30%. In the market for spring grades, distributors and other users of sacked flour
extended contract balances through September. In isolated instances, distributors
committed to coverage even into the
fourth quarter.
Cookie-cracker and specialty bakers
also held back, though their October-December coverage was estimated to be a
bit more extensive than that held by the
bread bakers. Soft flour users, though,
held out little hope for relief on the cash
wheat market side because of quality issues with the soft winter wheat crops.
Flour mill grind increased slightly last
week. Mills in the Upper Midwest, Buffalo and the Southeast ran five to six days.
The Southwest averaged six days. California, Pacific Northwest and Central
states mills ran six to seven days. MBN

Spring Standard, Minneapolis

Cracker Flour, Chicago

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

32 / Milling & Baking News, August 17, 2004

ber contract traded below $3 a bu.
Prices declined steadily from the outset of the week, as the market anticipated
U.S. Department of Agriculture production and supply/demand data would
confirm record corn and soybean crops
and a large spring wheat crop that would
offset the effect of any lowering of the
winter wheat estimate. The trade received all it expected and more. The
U.S.D.A. projected a 10.9-billion-bu corn
crop. It raised, not lowered, its winter
wheat estimate. And it forecast a spring
wheat crop exceeding trade expectations.
To round out the barrage of bearish data,
the 2004-05 world wheat production forecast was raised 11 million tonnes.
The U.S.D.A. projected U.S. production
of all wheat in 2004 at 2,122,894,000 bus,
up 3% from the July forecast but down
9% from 2,336,536,000 bus in 2003. Winter
wheat production was projected at
1,489,408,000 bus, up 1% from the July
forecast but down 13% from 1,707,069,000
bus as the 2003 outturn. Production of
spring wheat other than durum was projected at 544,535,000 bus, up 9%, from the
July forecast and up 2%, from 532,820,000
bus in 2003. Durum production was projected at 88,951,000 bus, up 380,000 bus
from the July forecast but down 8% from
a year ago. Projections for winter wheat
and other-spring wheat were sharply
above pre-report trade estimates that averaged 1,473 million and 511 million bus,
respectively.
In August supply/demand data, the
U.S.D.A. projected the U.S. 2005 wheat
carryover at 578 million bus, up 84 million from July and up 32 million bus, or
6%, from 546 million bus on June 1, 2004.
Total U.S. 2004-05 wheat supply was projected at 2,729 million bus, up 64 million
from July and compared with 2,900 million bus in 2003-04. Domestic use in 200405 was projected at 1,201 million bus, up 5
million from July and compared with
1,195 million in 2003-04.
Despite continued strong export demand for U.S. wheat, the Department
lowered its projection for U.S. wheat exports in 2004-05 by 25 million bus, to 950
million bus, compared with 1,159 million
bus in 2003-04.
World wheat ending stocks for 2004-05
were projected at 142.32 million tonnes,
up 10.08 million from July and up 10.02
million tonnes from 132.2 million tonnes
in 2003-04. World wheat production was
projected at 608.64 million tonnes, up 10.64
million tonnes from the July forecast, up
57.87 million tonnes from the 2003-04 global outturn of 550.77 million tonnes and
second in size only to the record crop of
610.1 million tonnes in 1997-98. The largest increase in production was projected
for China, up 3 million tonnes, to 90 milbakingbusiness.com / world-grain.com

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

Milling & Baking News - August 17, 2004

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