August 29, 2024
Have you ever looked in the Wall Street Journal and seen the futures price of wheat falling but the price of flour remains the same or even rises? Part of the reason can be falling millfeed pricing. When we mill wheat, we utilize the entire wheat kernel, less than 80% is flour but the remaining portion is sold as animal food. This animal food, or millfeed as we call it, competes with other feed ingredients such as corn. If corn prices are low (almost half of all corn grown is used as animal feed), millfeed prices will also be low. That "credit" that we get by selling the millfeed will not be as great thus forcing the price on the flour to go up. Conversely, if corn, or other feed ingredients are higher priced we get a better millfeed recovery, which offsets more of the price of the wheat thus lowering flour prices.
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