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Bellissimo Foods—Market Update
Week of December 19, 2014 Summary

Dairy: - The cheese markets have found support during the last week as the sharply price declines have spurred demand. The CME cheese markets could remain firm in the near term but solid milk production expansion compared to the prior year should limit any pending price gains. Cheese prices are expected to average below 2014 levels this winter. The butter market is seasonally weakening with its biggest daily decline this week in over four years. The butter market has declined 47% since mid-September. Any further butter price declines may only be modest.

Oil, Grains: - Wheat futures prices are on the rise due in part to fund buying but also in reaction to several global inputs. Futures reached six-month highs. Russia’s on-again, off-again threats to limit exports are a bullish market input, as is the report this week that the Ukrainian wheat harvest is expected to fall 13%, or three million metric tons, in 2014. Possibly the most interesting market mover was President Obama’s announcement that the U.S. will begin discussions to renew diplomatic relations with Cuba, a move applauded by wheat growers who would likely benefit from the ability to sell direct to the largest wheat market in the Caribbean. Basis premium prices have softened for some flour grades, but could only offset a small portion of the cost of this large run up in futures.

The potato markets remain inflated. December 1 potato stocks were 3% less than the same date two years ago. Larger sized potato supplies remain limited. Usually Idaho potato prices move higher during the winter. The five year average move for the 70 count Idaho potato market during the first quarter is up 37%. However, any pending seasonal price appreciation in Idaho potatoes may be mitigated during the next few months. The general tomato supply remains restricted due to crop challenges in the west. Tomato prices may be erratic in the near term.

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