CHICAGO/WINNIPEG, Manitoba (Reuters) – North American flour mills and bakeries are rushing to boost production as the spread of the new coronavirus leads to stockpiling of staples like bread and pasta.
The virus’ spread prompted orders to stay at home in some U.S. states, including New York, California and Illinois last week following similar measures in Asia and Europe. Depleted store shelves in both the United States and Canada reflect hoarding and a spike in demand for foods consumed at home.
Chicago May wheat futures WK0 were up more than 3% on Monday and hit a one-month high on strong global demand, while premiums for certain grades of milling wheat surged last week.
“There is a ton of pressure to produce to fulfill customer demand while also dealing with the obvious need to be extra cautious with our labor pool,” said Terry Tyson, general manager of the Canadian unit of Minnesota-based Grain Millers, which supplies groats – hulled oat kernels – to food companies and grocers.
The company finished building a second Yorkton, Saskatchewan, mill in November but was not planning to run it at full capacity yet. Now it may hire staff sooner to increase production.
The United States is the world’s fifth-largest wheat producer and consumer. Canada is the sixth-largest grower.
Denver-based Ardent Mills, North America’s biggest miller and a joint venture of ConAgra Brands Inc (CAG.N), Cargill Inc [CARG.UL] and CHS Inc (CHSCP.O), is buying more wheat and durum used in pasta from farmers to boost flour production, said Buck Vanniejenhuis, the company’s general manager for Canada.
“The flour is in production and the mills are running fine. People shouldn’t be concerned about supply. It’s a demand issue,” Vanniejenhuis said.
The United Nations’ Food and Agriculture Organization warned that global panic buying and hoarding could lead to shortages – even though there are ample supplies.
Robb MacKie, chief executive of the American Bakers Association, whose members include Grupo Bimbo (BIMBOA.MX) and Flowers Foods Inc (FLO.N), said many bakeries are running continuously and have streamlined operations, dropping niche products in favor of bread and cookies.
“Most of our members are cranking 24-7. They’ve added shifts and are working around the clock to get product made,” MacKie said.
Families are now preparing three daily meals at home, instead of one, causing them to load their pantries with bread, said Justin Gilpin, chief executive of the Kansas Wheat Commission, a farmer-funded advocacy group.
For farmers who struggled with a wet harvest last year, increased demand comes at a good time.
“My wife and I went into the grocery store and I was quite happy to see the flour was gone, baking supplies were gone,” said Matt Sawyer, who grew wheat last year near Acme, Alberta.