Not sure what Tom Petters jail term has to do with General Mills, but I thought I'd throw this Bloomberg article out there to give you an idea of where this company is going:

Nov. 2 (Bloomberg) -- Wheat’s steepest weekly drop since December may be just the start of a fourth-quarter slump as the biggest harvests on record turn this year into the worst for prices since 1990.

Wheat will decline 13 percent to $4.30 a bushel in Chicago by the end of December, according to Emmanuel Jayet, head of agricultural-commodities research at Societe Generale in Paris. Prices had staged the biggest October rally in at least 50 years, rising 26 percent to $5.7475 on Oct. 23, after rain delayed U.S. planting. Last week’s 9.8 percent drop shows the gains were “overdone,” Jayet said.

Global output rose 12 percent to a record 682.3 million metric tons in the year through May and will total 668.1 million in the current season, the second-most ever, the U.S. Department of Agriculture said Oct. 9. The surplus will likely lower costs for General Mills Inc., the maker of Cheerios cereal, and reduce profit for flour millers including ConAgra Foods Inc.

“Inventories are more negative for wheat than just about any other commodity in the world,” said John Brynjolfsson, the chief investment officer of hedge fund Armored Wolf LLC in Aliso Viejo, California. “There is a glut.”

Stockpiles worldwide will jump 12 percent by the end of May to 186.7 million tons (6.9 billion bushels), or almost 19 times more than what’s harvested in Kansas, the USDA estimates.

Leftovers from this season’s crop will equal 29 percent of what’s needed in the current marketing, the biggest buffer since 2003, when the grain was 31 percent cheaper. While demand is the highest ever, the supply of inventories from last year plus what is produced in the coming season will be a record 834.9 million tons, the agency estimates.

General Mills Wins

General Mills said Sept. 23 that lower costs for wheat and fuel helped boost profit margins in the fiscal first quarter. The Minneapolis-based company, which makes Gold Medal Flour and Pillsbury baked goods, expects falling flour prices in 2010, Chief Executive Officer Kendall J. Powell told analysts on a Sept. 23 conference call.

Omaha-based ConAgra, which produces flour for restaurants and food makers, said Sept. 22 that low prices may contribute to a decline in its milling profit. In the fiscal quarter ended Aug. 30, ConAgra Mills saw sales drop by more than $100 million.

Prices rebounded last month after U.S. growing areas got as much as 10 inches (25 centimeters) of rain, or more than six times the normal amount. About 76 percent of the so-called winter-wheat fields were planted as of Oct. 26, compared with a five-year average of 85 percent, the USDA said. Winter varieties account for 70 percent of output in the U.S., the world’s largest exporter.


U.S. grain sells for about $10 a ton more than supplies from France and Russia, Societe Generale’s Jayet estimates. Soft-red winter wheat at Gulf of Mexico ports fetched $210 a ton on Oct. 23, the highest since June, according to data from F.O. Licht. Egypt, the world’s biggest importer, bought 180,000 tons from France at $189.50 a ton on Oct. 15, two weeks after purchasing 150,000 tons from Russia for $170 a ton.

“Recent major purchases by Iraq, Jordan and Egypt were for more competitively priced European and Black Sea wheat,” Jayet said. “U.S. wheat is not competitive at all.”