Buying eggs—considerations and strategies

Buying eggs—considerations and strategies—


There are two buying strategies used to buy eggs:


1.      The traditional method contracts a set quantity of eggs for a set period of time (a month, a quarter, etc.) at a fixed price.  Most egg requirements are contracted this way.

2.      Grain Based—is considerably more complicated, but might make sense to a large industrial user under certain conditions.  I’ll explain grain based egg strategy in more detail below.

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Wheat/Corn Ratio--Wheat as Animal Feed

You will often hear analysts talk about wheat prices being too high or low relative to corn.  They use the wheat/corn price ratio as an indicator of how much wheat will displace corn (the largest animal feed) as feed.  They then attempt to translate that information into bushels of demand and calculate the impact on future wheat prices.  
Nutritionally, wheat and corn are not equivalent. Corn has about 90 percent of the nutritional value of wheat. That is why corn prices are normally lower than wheat.

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Complexities of the cocoa powder and cocoa butter markets


Complexities of the cocoa powder and cocoa butter markets--


Price relationships between beans, butter, and powder are never as straightforward as buyers would like.  A change in one component can change the price of the other component in a reverse direction, have no effect at all—or even change the price in the same direction.  It is not a zero-sum ratio even when markets are behaving “normally”.


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Flour Treatments

Enriched Flour

In the 1930s, nutritional surveys conducted by the Department of Agriculture revealed widespread nutritional deficiencies of thiamin, riboflavin and niacin (B vitamins) in the American diet.  These findings prompted the fortification of certain staple foods.  The Food and Nutrition Board recommended a program for fortifying white flour and white bread with thiamin, riboflavin, niacin and iron, with calcium and vitamin D as optional.  

In May 1941, the flour enrichment standards were issued and finally adopted in 1943.  The standards were recently changed, and as of January 1, 1998, enriched flour now also must contain folic acid.  The enrichment of flour has no affect on its baking performance or caloric value.

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America vs. the Sugar Lobby


On Wednesday, the Senate voted not to tamper with the Depression-era program that protects U.S. sugar growers.  It’s not often conservatives and liberals, Democrats and Republicans, pro-growth conservative groups and the Teamsters agree on something.  In fact, it’s almost unheard of.  But when it comes to the federal government’s sugar program – one of the most egregious corporate welfare handouts in a long list of wasteful programs – these strange bedfellows have found common ground. 


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Flour Pricing Components

Flour prices are influenced each day by three rather independent and potentially volatile components.  

  • The first component, wheat future prices, forms the base from which actual wheat prices are derived.  Futures are standardized, tradable contracts.  Parties swap pieces of paper, obligating them to make or take delivery of wheat some time in the future.

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