MARKET REPORT FOR JULY 2008

OVERVIEW
The Fancy Food Show in New York was held June 29 thru July1st. Almost to a one, all of the packers represented, no matter which country, we are complaining about high costs. Be prepared to receive another round of price increases as these overseas packers pass their increased costs on to the importer, and then on to the distributor, who in turn passes the increases on to the operator. The cause is not so much related to a given crop condition, but more to what you have been hearing on the news every day: oil prices and the weak US dollar.

Overseas packers are complaining about the increased costs of tin plate, corrugated boxes, plastic jars, energy to run the factories, increased labor costs, and fuel to power the truck to take the containers to the port for shipping. The farmers are complaining too about the increase in fuel to run their tractors, increased fertilizer, increase labor cost, etc, etc, etc.

Remember back in October 2007 when I address the then stupid price of a barrel of crude oil at $85.00 and predicted that it would rise to the very stupid price of $100.00 a barrel. Well, today’ incredible price of $142.00 a barrel is beyond stupid. Or is it? We are just one hurricane, one international crisis, one incident away from $200 a barrel. Americans are paying $4.25 a gallon for gas which is a bargain when compared to other countries. Our gasoline is cheap compared to Europe where Spain is at $8.77, France and Germany at $10.00 and Italy at $12.00 per gallon. A friend of mine just returned from a golfing trip to Scotland and reported gasoline selling for $14.00 a gallon. Ouch!

The transportation industry is reeling under the burden of high diesel fuel. Truckers in Europe are protesting and begging for relief. The cost to move a container from a factory to a port in Europe is beyond the word for “expensive”. This high fuel costs are effecting transportation in the USA. The industry is already reportedly 42,000 trucks short. Independent drivers are parking their rigs, not taking loads, because they can’t afford the cost of fuel. It is virtually impossible to find a trucker that will take more than three stops on a truck. Most want only two stops, and these have to be made in the same day.


MUSHROOMS
The crop in China is over and it was excellent resulting in a more stable market. Pricing has declined from last year and is expected to remain steady with ample supply to fill the market’s needs. Like always we would like to caution you to compare drained weights. They can range from the standard net drain weight of 68 ounces per can down to a 62 ounce. There are reports of some transactions for 58 ounce at a lower case price. It will always cost more per ounce when buying a lower drained weight because the packaging, labor, energy and handling costs still remain the same.

RIPE OLIVES
The Spanish crop produced enough ripe olives to meet market needs, but at very high prices. Of all the producing countries, Spain has the greatest number of olive trees and the highest costs. As a result, Spain has priced itself out of the market. Their sales have been captured by Argentina, Morocco, and Egypt. These usurper olive producing countries have a superior product compared to the Spanish Hojiblanca and much lower labor costs.

GREEN OLIVES:
The Spanish crop was ample but with average size smaller. As with the ripe olives, the Spanish green olive sales have been taken over by other countries, mostly Argentina. Green olives are hand picked, normally three at a time from a tree, resulting in high labor costs in Spain. Argentina has been suffering from a crop shortage of approximately 35%. This, coupled with the farmers striking against the government’s extra export tax on foodstuffs have cause major delays in shipments from Argentina. There currently is a sever shortage of sliced green olives, sliced salad olives, and broken salad olives.

PEPPERONCINI
Packers in Greece and Turkey announce a $3.50 price increase during the Fancy Food Show. The increase was not so much a result of a poor pepper crop as it was due to the increase of PET plastic (oil), energy costs, weak dollar, etc.

ARTICOKES:
Peru is basically sold out of their new crop. The Peruvian packers took a $5.00 increase for this crop’s production. Chile, also short on product, followed suite with a $5.00 increase. Spain has a short crop with questionable quality and very high prices. Spain’s artichoke sales have suffered resulting in several artichoke packers closing. That leaves Morocco, Egypt, and entering into the foray is China with limited production. You will see some tightening of supply with related firmness in pricing.

WHEAT:
Despite the terrible flooding in the mid-west, the US will plant more wheat acres this year. Wheat futures are declining. While bad weather could put a crimp on the total end production, at this point we should see some relief on some domestic wheat products.

The European wheat crop looks very good. We should see a much welcomed price reduction for pasta in the fall as the new crop is processed into pasta. Let us hope that the pending price relief isn’t wasted with an increase in other production and transportation costs and with a weaker dollar.


Patrick M. Redfern
404-358.4965

WHEAT UPDATE FROM RONSON FOODS

March 4, 2008


The World Wheat Crisis of 2007 has carried forward into 2008. World demand for grains will continue well into 2009. After several years of a rather boring, non-fluctuanting price range for US wheat we are seeing this rather boring commodity escalate in price. What causes this escalation that has affected the US pricing for flour, breads, eggs, cheese, poultry, pork, beef, and certainly pasta? There are several factors that enter into the equation. .

WORLD DEMAND:
Countries such as China and India are enjoying a surging economy that produces a growing lower middle class that are demanding better food. Wheat not only for bread and pasta, but also for animal feed as well. India was a net importer of wheat for the last two years. This 2008 Indian crop might not be enough to meet their domestic needs and may end up buying wheat from the USA this year. Those countries, such as the USA and Canada that have abundant supplies of wheat are finding their inventories in high demand, and at high prices, throughout the world. Right now the US stocks of wheat is at a 60 year low as we see US wheat making its way throughout the world. Currently world stocks of wheat are down to less than 30 days supply.

CROP FAILURES:
Australia has had two crop years in a row that failed due to weather conditions. European wheat crops also came in short and could not meet the high demand. The result is very high pricing per bushel of wheat. Southern Hemisphere crop production has lagged behind their domestic needs. For years many African countries have been net importers of wheat. It is interesting to note that in developing countries the percentage of household income spent on food ranges between 60-70 percent. In developed countries it is much less at between 10 -12 percent. As crops fail in developing countries and prices escalate, the ability of an average household to feed itself is in jeopardy. This is truly a global economy where what happens in Argentina, India, or Australia does have an effect on the USA.

GRAIN COMPETITION:
Grains are competing for acreage. The production of corn has increased due to the FED mandate that Ethanol be used in 25 % of our gasoline. US farmers are now making a very healthy living (as they should) growing grains. Soya, corn, sorghum, and wheat all compete of the same place in the ground. As a result, all grains have increased tremendously. The Minnesota Board of Trade quoted winter red wheat at $24.00 last week. Yes, $24.00 a bushel for a product that fetched $5.00 a year ago. Futures are selling for $15.00 a bushel as the new crop time approaches this July. The same product was selling for approximately $5.00 last year. The EU has a similar issue saying that 10 percent of transportation fuel must come from biofuels by 2020. During 2007 farmers sold a rather large percentage of their wheat to be made into biofuels instead of selling direct to the mills for pasta. Several Italian pasta producers have been forced to close their production facilities simply because they cannot obtain the needed wheat.

DOLLAR EXCHANGE:
The US dollar is now at 1.52 against the euro. The rate was 1.46 in November. That’s a 4.11 percent decline in the purchasing power of the dollar. This is putting great pressure on imported products from Europe, especially Italian Pasta. Virtually all exporting European packers will only contract in euros as dollar contracts are no longer accepted. That causes the exchange rate impact with higher pricing for all European products. This also adds to the cost of crude oil.

FUEL:
WOW, crude oil at $104 a barrel! This has a major effect on transportation, factory production, fertilizer, ocean steamship transportation, inland transportation, and US transportation. I read a report that the additional cost of fertilizer (oil based products) will cost a farmer approximately $1.00 more to grow a bushel of wheat in 2008.

PROSPECTS:
It appears that prices will continue to increase world wide for at least the next seven to nine months. Then the new US and Australian crops will be harvested. Prices should go down at that time, but not to the levels of 2006. The financial new channel, CNBC, reported that all commodities have had dramatic price increases. The first six days of March saw wheat increase by 27%. This is way too much speculation. The bottom line is that we will need a very good crop in 2008 and 2009 before pricing and availability will revert back to normal.




Patrick M. Redfern
Ron Son Foods, Inc.

MARKET REPORT NOVEMBER 2007

PATRICK REDFERN MARKET REPORT NOVEMBER 2007


CRUDE OIL:
The world economy is affecting Main Street USA. My last market report of September reported that crude oil was then at $80.00 a barrel and was expected to reach $85.00 within a few weeks. The price of crude oil hit $98.00 a barrel on 11/7/07. Projections are that the price for crude will continue to increase to over $100.00 by the end of December. Some doomsday Sayers are predicting that crude oil will increase to between $130.00 to $150.00 a barrel. US stocks of crude oil are depleting to record lows. World consumption of crude oil is reported at 85.6 million barrels a day and is projected to increase an additional 1.8 million barrels a day next year. Increasing strong oil consumption in India and China has contributed to the general opinion that world demand for oil is outpacing supply. The weak US dollar has also been a major contributor to the rise in oil pricing as crude oil is generally traded in US dollars.

We expect to see a continuation of ocean freight costs as steamship lines passes on higher bunker fuel sur charges to the importer. We are seeing monthly increases of fifty cents or more per cases just to cover the fuel sur charges. Here in the US the cost of fuel is forcing the truckers to reduce the number of stops. It is impossible to find a trucker that will make more than three stops. Therefore, the minimum number of cases for a delivery has to increase. The same goes for distributors delivering to their operator customers.

US DOLLAR EXCHANGE:
The dollar was at $1.38 when the September market report was written. Today the dollar is at 1.466 to the Euro. Some currency experts are predicting the dollar to decline to as low as 1.600 to the Euro in 2008. Why? Yesterday a Chinese minister stated that China is considering moving the 1.4 Trillion dollars that they are holding to a more viable currency, such as the Euro. For sure, we will see the dollar at 1.500 euros’ by the end of December, if not sooner. The weaker dollar will add pressure on the price of crude oil, forcing it to go higher. Imported items, be it food stuffs, cars, clothing, machinery, etc, all will have higher prices due to the weak dollar.

WHEAT:
The world wheat crisis of 2007 will continue on in 2008. Global wheat production for 2007/08 is projected to be down 5.8 million tons this month reflecting lower output in Australia, Europe, and the US. The US wheat ending stocks for 2007/08 are projected at 307 million bushels, down 55 million bushels from last month. If realized this will be the lowest ending stocks in the US in 49 years. Wheat will remain short and correspondingly carry higher prices world wide. Pasta and related wheat items will continue to increase in pricing.


TURKEY:
Fires and sever drought has caused havoc with Turkey’s olive and grain crops. Turkey has historically been a net exporter of wheat but this year is expected to import up to 1,000,000 metric tons for its domestic consumption. The drought in the eastern Mediterranean has impacted on the production of Peppers of all kinds, Capers, Sun Dried Tomatoes, Pepperoncini, and some Olives. Capers and Sun Dried Tomatoes have increased over substantially because of this.

SPANISH OLIVES:
Spanish production this crop year is generally good except for Queen olives. Manzanilla production is expected to come in at 10% above last year’s crop. Prices should be stable fob Spain, but then again we have to factor in the weak dollar and fuel surcharges. The Hojiblanca production is expected to increase by approximately 15% which should help provide pricing relief on a fob Spain basis.

The problem child in this 2007/08 crop is the Queen olive. It was no secret that Spain was importing Greek Queen Olives to augment their production. Greece lost 454,000 acres of olive/olive oil production to this summer’s fires. Spanish Queen Production is off 20-25% (with no help from Greece) with smaller average fruit size. There is a high percentage of Azofairon or petite/sub petite olives.

MUSHROOMS:
There remains only two Chinese mushroom production facilities, albeit rather large facilities, that can ship to the US due to antidumping duty constraits. In most of 2007 India had sever problems with compost used in the growing operation that drastically reduce production. India is now picking up productions and will soon be in normal production. With both China and India back to full steam and as they begin to compete for business we are predicting the market price will start to come down by June 2008. In the meantime US stocks of mushrooms pieces & stems will remain critical. Pricing will remain very firm, supplies not enough to meet demand, and absolutely no deals to be found.

ROASTED RED PEPPERS:
Spain will have supplies but very strong pricing due to the exchange rate. . Turkey had decent pricing but is no longer taking any orders because they are sold out due to the drought. The bet source will be in Chile and Peru. Prices will be much more competitive than Spain with comparable quality.

ARTICHOKES:
Spain has had quality and supply issues. Pricing is high for a multitude of reasons. Spanish quality is questionable with browning in the tips. Chile and Peru this year offer better quality at competitive pricing.

Patrick M. Redfern

Ghigi Pasta

There has been a lot of speculationla tely aboutt he situationw ith Ghigi pasta. We would like to clarify the pictures o that the rumors and speculation can be put to rest.

Ron-Son Foods has been associated with Ghigi for twenty six years. It is sad to have to report that, due to reasons beyond anyone's control, Ghigi's strengthh as become its Achilles heel. Ghigi is a co-operativem adeup of local wheat farmers who always committed their product to the Ghigi mill.

This was then turned into Ghigi pasta. It was an axrangement that had lasted over one hundred years. In 2007 things happenedth at were to changee verythingw ithin a period of threem onths. The first blow was the delay in the issuing of licenses for the new factory which had been due to open this past summer. Then came the huge run up in wheat prices. The co-op farmers were always paid a fixed rate for their wheat,a nd then at the end of the fiscal years, they shared in the past a mill's profits.

In 2006 the profits were quite modest. This year speculatorsa nd big corporationsa pproachedth e farmers and offlered them money up front, payable net 10 days for their wheat. Most of the farmers took the deal and Ghigi was in trouble. Today there are two companies interested in buying Ghigi and what ever happens will be decided before the end of October.
Ron-Son Foods, in order to secure a steady reliable supply, has decided to share its needs withtwo packers. Ghigi hopefirlly will be one, and the other will be De Matteis from Avellino. They arealsoa miller asw ell asa pasta producer just like Ghigi. They are qualrty oriented and have won awards for their environmental practices.

Leone Bianco is the label we have decided to use for our pasta products in the future. It will beItalian, it will be of high quality, and having Leone Bianco as the label it will help prevent us from being a victim of any future cataclysmic market conditions.

We at Ron-Son realize we are all subject to the present malaise of the dollar and the huge jumpin wheat prices. Believe us when we say that we are doing everything to minimize the affects for our customers at this difficult time.

Please note that at this time we do not have licenses for Trivellini or Small Shells. We are in theprocesso f selectings omethings imilar. It is also worth noting that therew ill be new shapes available and we now have access to Organic and Whole Wheat pasta products.

We will keep you advised as the time to switch to Leone Bianco gets closer. Thank you for yourpatience. Please feel free to contact me or your representative if you require any further information.

Sincerely yours,
Ron-Son Foods marketing team