K.C. millfeed soars on Hostess fallout

by World Grain Staff
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KANSAS CITY, MISSOURI, U.S. — Nearby prices for truck and rail delivered millfeed in the U.S. Southwest region were up sharply on Nov. 28, and traders said the gains reflected cutbacks in flour grind at mills that lost business related to the liquidation of Hostess Brands, Inc. Traders added that catch-up on flour grind was not as brisk as expected after the Thanksgiving holiday break, when most facilities were down at least two days.
A trader in Kansas City said flour grind was five days this week rather than the 6½ days that would be normal at this time of year. As a result, millfeed supplies have grown much tighter and prices were reflecting the current scarcity.
In a market where a $10-a-tonne daily move is significant, truck-delivered millfeed prices in Kansas City gained $15 a tonne on Nov. 28 and were up $23 a tonne, or 11%, since last Nov. 23. Rail values through December were up $10 a tonne on Nov. 28 and were up $15, or 8%, so far this week.
The gains stood out in a market that, before the Hostess liquidation, had been relatively quiet in recent weeks as traders waited for demand to perk up as temperatures cooled and livestock producers needed additional manufactured feed. This demand remained elusive and prices stayed mostly steady or gradually softened over a number of weeks.
Nothing seemed to be able to spur the market higher since the summer drought, when prices reached historic highs. As recently as earlier this week, Southwest traders contended herd culling during the summer may have put feed demand on a long-term lower trajectory.
The current situation hasn’t affected just the Southwest; some supplies have been shipped west from Kentucky and the Southeast, a trader said. Prices in Chattanooga, Tennessee, U.S., which have been steady and the lowest in the country recently, firmed $5 a tonne on Nov. 28. Other locations, though, seemed relatively unaffected. The Upper Midwest posted modest gains Wednesday of $3-$5 a tonne and central states prices were mostly steady.
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