Sky-high protein levels mean farmers shouldn’t expect much in the way of premiums this year, say analysts.
The Canadian Grain Commission says the average protein level for all grades of spring wheat is 14.1 percent based on 1,100 samples. The durum average is 13.9 percent based on 500 samples.
“Protein at the present time is up substantially over last year, and it’s definitely well up over our 10-year average,” said Dave Hatcher, a research scientist with the commission.
The 10-year average is 13.4 percent for spring wheat and 12.8 percent for durum.
Hatcher said the sample size is one-quarter of what the commission expects to receive this year, but he doesn’t anticipate levels dropping as more samples arrive.
It is the same story south of the border. U.S. Wheat Associates is reporting an average spring wheat protein level of 14.2 percent as of Sept. 25, up from last year’s level of 13.6 percent. The durum crop has average protein of 15.7 percent compared to 15 percent last year.
Hatcher said the elevated protein levels are the result of timely rain during the flag leaf and filling stages of crop development followed by prolonged hot and dry conditions.
Kevin Auch, vice-chair of the Alberta Wheat Commission, hasn’t had time to check protein levels in his crops near Carmangay, Alta., but he expects they will be good.
“I have heard of some guys in the area that have really high protein, like almost unheard of,” he said.
Auch has spoken to farmers with spring wheat and durum protein levels in the 15.5 to 16 percent range.
“It is just about off the chart,” he said.
Some growers have expressed frustration about the lack of protein premiums at their local elevator.
The Alberta Wheat Commission tracks protein spreads on its website, and the spread for No. 1 CWRS 14 percent wheat over 13.5 percent wheat was six cents per bushel as of Sept. 2. The spread for No. 1 CWAD 13.5 percent over 13 percent was three cents per bushel.
“It just kind of makes sense that if there’s lots of (protein) around, they’re not going to pay,” said Auch.
“This is a bit of an anomaly. It’s pretty rare that most everybody gets high protein. That’s unusual. But you get a drought and that’s what happens.”
He said farmers who can afford it might want to store their high protein wheat and durum in hopes premiums will strengthen, depending on what happens with wheat production in other regions of the world.
“Just because there’s quite a bit of it on the market right now, it might only take a few months and that will change,” said Auch.
“I’m not saying it will because I don’t know the future, but the markets can change fairly quickly.”
Neil Townsend, director of G3 Market Research, said demand for high protein wheat does not tend to expand when there is more of it around.
“(Customers) are not as interested in protein as we think they are,” he said.
As well, they know that grain companies tend to over-deliver on protein in years like this.
“If (the buyer) says minimum 13 (percent), they might get delivered 13.5 (percent) anyways in these kinds of circumstances,” said Townsend.
He believes this year’s unusual distribution of high protein crops also explains dismal protein spreads at the elevator.
“The one thing we’re seeing is these high pockets of protein are in areas where normally there isn’t high protein,” said Townsend.
For instance, some elevators might not have much of a track record of paying protein premiums and may not have the proper infrastructure in place to reward farmers.