Spring Wheat jumps 16% to US$23.10 a bushel as MGX opens with no limits trading - Big Food improves product pumps the price ...profits ..????
"Many (wheat) end-users are shifting from a 'just-in-time mentality' to a 'buy-it-before-I-need-it mentality.' They don't want to be caught short again like they were this year," said Farm Futures analyst Arlan Suderman. Evidently everyone wants to lock in March supplies regardless of price.
The market cannot be fully evaluated until the market shuts.( @ 13.40 (Delayed) local time the price has risen as high as US$25.00 for March Dly a staggering rise of 25 % - but fallen back to US$24 ) May Dly is US$17 plus = US$ 1650 metric ton . This must have an impact very swiftly on retail prices. (1 bushel of wheat or soya beans = 60 lbs = 33 bushels per metric ton. Corn is sold in 56 lb bushels Barley 48lbs bushels DON'T ASK WHY)
Soybeans for May delivery jumped to a record $14.85 a bushel on the Chicago Board of Trade CBOT before easing back slightly to $14.695 a bushel, up 31.25 cents. March corn rose 13 cents to $5.35 a bushel after earlier hitting a record $5.4175 a bushel - July Corn is trading at US$5.58.
Kazakhstan is one of the worlds larger wheat exporters and Akhmetzhan Yesimov the minister of agriculture, said the government wanted to limit wheat exports as it battled against rising domestic inflation of nearly 20 %. The country has sold about 75 percent of its wheat and will impose customs duties on what's left — about 110 million bushels.
"In a normal year, 110 million bushels wouldn't be a big deal, but with tight supplies like you have, it's a chunk of wheat," said Jason Ward, analyst with Northstar Commodities in Minneapolis.
Packaged Food companies cut costs in unexpected ways
Packaged food companies,like Minneapolis based General Mills (NYSE: GIS ) are forcing savings faced with higher commodity prices in remarkable ways - the number of pretzel shapes in its Chex and other snack mixes to three, from 14. They cut in half the number of pasta shapes it uses in Hamburger Helper, to 10. Food engineers and marketers even worked on the pasta bits so they nested together, enabling the company to shrink the box reducing packaging raw material costs 10%.
General Mills, says price increases accounted for two to three percentage points of the company's first-half sales gain of 7%.
On Feb. 19 GM forecast EPS of $3.64 to $3.66 per share, up from the $3.18 per share -- and $1.14 billion total -- GM earned in fiscal 2007 and look for total sales up over 6% to US13.2 Bn.
ConAgra wants to save US$225 Mn in cost savings - for example they will cut US$20 Mn. annually by reducing the number of can sizes from over 100 to 20 over 2 years, for everything from Hunt's tomato sauce to VanKamp beans. ... "As part of plans previously communicated, the company recently implemented pricing actions for a number of its consumer brands and has announced additional significant increases that will be effective in late March 2008. These actions are expected to be evident in the company's results for the fiscal third quarter and more significantly in the fiscal fourth quarter." ConAgra Foods CEO Gary Rodkin at the the Consumer Analyst Group(CAGNY) of New York at that group's annual conference in Boca Raton, Fla. last week.
Some others just boost retail unit prices in a carefully researched marketing plan called the Neanderthal Fuck the Consumer Project - price hikes or smaller count packages. Sara Lee (NYSE: SLE) whose biggest customer in the US is WalMart , has had 4 bread price rises this year and you can expect another before end May - they also introduced a "new North American organizational structure," in December 2007.... and the Press release said ... " the corporation wishes to caution readers not to place undue reliance on any forward-looking statements."
“We have taken appropriate pricing actions and have made significant investments in
marketing and innovation in the first half of the year,” said CEO Brenda Barnes at the CAGNY meeting
UBS Securities says food companies stocks are down 11% in the 3 months since December 1st
ConAgra Share price last 3 months
Sara Lee 3 months share price
BTW the Sara Lee Press release at CAGNY also says in it's ante-penultimate paragraph .... after a litany of WalMart's policy on inventory etc., a wonderful boiler plate phrase which speaks volumes for predicting lousy results ...."In addition, the corporation’s results may also be affected by general factors, such as economic conditions, political developments, interest and inflation rates, accounting standards, taxes and laws and regulations in markets where the corporation competes."
AFP reports that Executive Director , Josette Sheeran of the World Food Programme told the Financial Times that if World Food Programme (WFP) donors did not contribute more money, the agency would have to look at "cutting the food rations or even the number of people reached".