MARKET UPDATE. February 2005. Milling. &BakingNews. Market FAX. finis. PBI Market Summary Update. February 10, 2005 Dear Valued Customer:
February 10, 2005
Dear Valued Customer:
In our December update we outlined some of the key events that had transpired through the end of 2004. The storage and transportation problems that were having a dramatic affect on the protein premiums (basis) are beginning to ease somewhat but, as illustrated in the charts (pages 8 & 9) are still at historically high values. This is due primarily to limited farmer selling, a lower futures board, low protein in the HRS crop, and quality problems in the HRW crop. The farmer has been reluctant to sell many bushels with the board continuing to move lower. Premiums have remained firm, and both Minneapolis and Kansas City have inverted. If this does not convince the farmer to sell, the next way to get more bushels sold is a futures rally.
Record high premium levels have caused both markets to invert in an effort to induce more farmer selling.. Premiums in both the Kansas City and Minneapolis markets will be driven by quality, freight, export demand, and the willingness of the farmer to sell grain.
6 KEY FACTORS TO WATCH
In summary, basis prices are beginning to trend downward as are the wheat futures, which in turn, is helping flour prices, these declines, primarily in the basis, are coming much slower than had been projected but should continue to do so nonetheless. The grain industry anticipates further declines going into the spring months barring any major weather problems. If this trend continues, it is our intent to average forward with the lower futures that would allow for some price relief from our current positions.
The information we’ve provided is a reflection of where the grain markets are today and is not necessarily an indication of what the markets may or may not do going forward. Please feel free to contact Lauri Gritten our Vice President of Sales at 800-826-1200 or 317-837-0478 or your PBI customer service representative with any questions you may have.
Horizon Flour Milling, LLC
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