It’s two different worlds with wheat in the United States and Canada.
And things could get and stay wacky until everybody’s figured out what they’ve got.
“It’s going to take the system some time to figure out how much of what is out there,” said Brian Voth, who operates the marketing advisory firm Intellifarm in southern Manitoba.
That’s the situation on both sides of the border with grain companies and marketers assessing the situations they’re dealing with, including:
- high protein but low yields in the western Dakotas and Montana
- OK protein but high yields in the eastern Dakotas and Minnesota
- low protein but high yields in the eastern and central Canadian Prairies
- high protein and low yields in the western Canadian Prairies
These divergent situations have created different protein markets by region with some paying a pretty penny for protein, while others are giving protein little extra.
“Even in the east, where we had the higher yields, we still had fairly good protein,” said Erica Olson, market analyst for the North Dakota Wheat Commission.
“We’re really not seeing very big protein premiums.”
However, the situation is reversed in Canada, where most of the crop is low protein. Voth said the spread between a 13.5 percent protein spring wheat and a 12.5 percent crop is now about 80 cents to $1 per bushel.
That can be considered a pre-mium for high-protein wheat or a massive discount on low-protein wheat.
“Your floor price is the feed market, unfortunately,” said Voth.
“It’s the opposite of what we expected to see, considering it was hot and dry.”
Voth said some recent bids he’s seen have had 13.5 percent protein wheat at $6.25-$6.50 and 12.5 percent down at $5.25-$5.50.
Yet south of the line protein in most spring wheat crops is about half a percentage point higher than usual. The market is pricing in little premium for the highest protein values.
Wheat might flow in odd ways this winter as grain companies and farmers try to get the most for their various protein levels of wheat with some trying to blend up and some blending down.