Grain-based foods shares dive

by Josh Sosland
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Share prices of grain-based foods companies declined sharply this week, slumping at a rate only slightly less steep than broader market indices. The Grain-Based Foods Index, as calculated by Milling & Baking News, was down 15% in the five days ended Oct. 9, versus 18% declines in the S&P 500 index and the Dow Jones index of industrial shares.

Among the 27 grain-based foods companies in the index, 8 sustained declines of 20% or greater — American Italian Pasta Co; Hain Celestial Group; Interstate Bakeries Corp.; J&J Snack Foods Corp.; Krispy Kreme Doughnuts, Inc.; MGP Ingredients Inc.; Sara Lee Corp. and Seaboard Corp.. Other companies in the index hardly went unscathed, with 15 more sustaining declines greater than 10%.

While grain-based food companies have struggled with the rest of the market in recent days, the sector has not fallen nearly as steeply as the rest of the market since the beginning of September or year to date. The index is down 15% since Sept. 4, versus a 26% decline in the S&P 500 and a 23% drop in the Dow. Since Jan. 3, the difference is even more dramatic with a 21% decline in grain-based foods versus 37% in the S&P and 34% in the Dow.

In the year-to-date performance, a number of baking companies have dramatically outperformed the broader market. In contrast with the 37% decline in the S&P 500, shares of Flowers Foods, Inc. were up 14% through Oct. 9; shares of General Mills, Inc. were up 7%; shares of Lance, Inc. were down 0.6%; shares of Grupo Bimbo were down 2.6%; and shares of George Weston were down 1.6%. Companies with the widest declines include Bunge Ltd., down 66%; Corn Products International, Inc., down 43%; Hain Celestial, down 36%; MGP Ingredients, down 83%; Tasty Baking, down 57%; and Maple Leaf Foods, down 51%.

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