Michigan Sugar Beet & Unseasonably Warm Weather

The good news: there is a good crop of sugar beets in Michigan. Great bumper crop, actually. The bad news: continued warm weather from El Niño could cause the quality crop to deteriorate.

Not many suppliers are talking about it because the less-than-ideal weather could lead to to sugar price increases, and of course no one wants that. Still, when dealing with Mother Nature, we have to adapt as best we can to the conditions and keep our supply as strong as possible while still giving customers the best prices we can.

How Does a Sugar Beet Crop Yield Deteriorate?

Sugar beets are stored in large piles that freeze solid during the winter. Producers work off those piles. Unfortunately, when the El Niño treats the beets to unseasonably warm weather in February, the piles break down and the quality deteriorates.

The beets in the middle of the piles, for example, are warm. They are rotting from within an otherwise quality pile of beets. As the weather stays warm and more and more beets fall victim, the entire pile can become compromised.

As mentioned, it’s a very good crop, so there’s still quality product to be gathered, but the problem is there is less of that good product as the pile breaks down. Plus, producers aren’t certain how much of it they’ll be able to run through processing or what the quality of the output will be.

Working fervently to process as much quality product as possible increases processing costs, which increases the prices of sugar beets.

At Bremer, we only buy and sell ingredients of the highest quality, so further unseasonable warmth could decrease the available yield and increase processing costs, thereby driving up the price of the high-quality yield producers are able to salvage. This is an industry-wide issue as no one is immune to nature.

What’s the Best-Case Scenario?

The bumper crop had everyone excited as prices should’ve gone down. El Niño had other ideas.

If February weather returns to its normal, frigid self, and if the current beet crop can freeze solid until later in March, the quality yield will be higher, the processing costs will be lower and sugar beet prices should not increase by much, if at all.

For now, though, we are keeping tabs on the situation and working closely with those in the supply chain to make sure we can get the best products at the best prices for our customers.

If you have any questions on sugars and sweeteners, please let us know how we can help. Connect with us today!

Why do Flour Prices Fluctuate?

Why do Flour Prices Fluctuate Daily?

You don’t necessarily have to be a licensed stockbroker to understand flour prices, but it wouldn’t hurt. Fluctuations on flour pricing are intricate, but can be simplified for a general understanding. Three main variables—all of which are volatile—influence the price of flour every single day.

  • Wheat future prices. Traded on the Chicago Board of Trade (CBOT) and NYSE Euronext wheat-future exchanges, a buyer agrees to take a specific quantity of wheat on a future delivery date at a pre-determined price. Wheat futures are standardized contracts, and the seller is then bound to deliver the quantity purchased on the date specified.

    On the CBOT exchange, prices are per bushel and traded in lots of 5,000 bushels.

  • Cash basis. It’s not quite as simple as exchanging a contract and fulfilling it. The actual cost of delivering wheat to the mill is incorporated, as well as the grade and quality of wheat the miller requires. When combined with the wheat-future price, we get an actual cost of supplying wheat to the mill.
  • Millfeed. One more component that influences wheat prices results in a credit for the mill, ultimately reducing the price of flour to customers. Not quite 80 percent of the wheat kernel can become flour, so flour mills are left with a byproduct called millfeed (or millrun). The byproduct price mills receive is treated as a credit, which means customers see lower prices on flour.

With fluctuating exchange prices, ever-changing delivery prices and variable millfeed quantities, it’s easy to see why the price of flour changes daily.

Generally, the price of flour stays fairly steady, increasing and decreasing moderately over time. However, just like the stock market, large jumps in either direction are possible, and both sellers and buyers need to take all these factors into account when making transactions.

Looking for a flour supplier in Michigan, Illinois or Indiana? Contact us today and let us know how we can help.

Which Crops Fared Best Summer 2012

The drought of 2012 will go down in history as one of the worst droughts for the United States in recent history. However, while many crops failed from this summer’s drought, others had warm springs and winters making their crops incredibly successful. With that ebb and flow in mind, here is our list of crops that fared the best, and which have done the worst this year.

Best:

  • Winter Wheat
  • Spring Wheat
  • Beets

While the summer wheat had to withstand one of the harshest summers in decades, the winter and spring crops fared well with the high levels of rain and the incredibly temperate winter and spring throughout the Midwest. Beets have also been incredibly resilient this summer despite the heat.

To be clear, these good crops may still not be any less expensive as those prices are set by the market. It should also be noted that, while the crops have fared well, we have seen other effects of the drought like main shipping arteries running low which continues to drive up shipping costs.

Worst:

  • Apples
  • Corn
  • Soybeans
  • Cherries

The crops that have had the worst year are well known. Corn and soybean crops have dried up all over the nation, especially with the record heat in the midwest. Apple trees enjoyed the early blooms which came from the temperate winter and spring weather, but many areas in the Midwest experienced a hard frost for a few days just after the apples began to bloom – which has ruined much of the crop. Many orchards located near us in Michigan, have experienced only 10% of their crop production when compared to last year. Michigan cherries also struggled this year for the same reasons. Early bloom and frost that lead most cherry farmers to see an 80-90% loss of both sweet and tart cherries.

It should also be noted that certain types of farmers of all crops have fared much better than others. Those farmers with deep wells and irrigation farms have fared much better than those without, this year. The irrigation farmers are seeing an ever increasing demand since those without the irrigation lost a large amount of the nation’s supply.

This has been a bit of hectic summer and the markets are reflecting that. Feel free to drop us a line and let us know how your business is faring through the drought.

Corn Belt Drought Outlook

It’s not often we see national and international agricultural news groups reporting on the chances of rain in Missouri but it looks like, for the spring and summer of 2012,  we might be looking at drought type conditions for a large portion of the Midwest. In almost all of Iowa, Minnesota, Kansas and about half of Missouri and Illinois under conditions that range from abnormally dry to moderate drought, we are starting to see the affects this will have on the wheat and corn crops in what is known as the corn belt of the United States.

In some areas in this region the fields have gone up to 2-3 weeks without any rain and, while much of this area is calling more rain soon, even a good rainfall will not take affected areas that are in the “moderate drought” category into the green, they will still have to see a good bit more before getting out of drought like conditions. Looking at the “Precipitation Needed” Palmer Map (see below) we almost the entire central Midwest needing between 3-6 inches and in some areas up to 9 inches of rain.
Precipitation Needed Palmer Map
Though much of the corn has had pretty good conditions up to this point, it has been pointed out in Illinois that they have been finding “floppy” corn plants. This is probably due to a lack of rain when the plants have gotten to a crucial point in the plants development. This is primarily for corn plants that were planted in April.

While it is unclear how or whether this will affect prices it is always good to better understand crop conditions leading into one of the main harvesting times for a large portion of the country. We will keep you up to date as we continue watching this region.