Protein spreads for spring wheat are raising eyebrows.
“They’re awfully wide,” said Brian Voth, president of IntelliFARM Inc.
“They’re wider than what we’ve ever seen as long as I can remember, even under the (Canadian) Wheat Board days.”
The discount for 12 percent protein is about $1 per bushel below the price paid for 13.5 percent.
The discount was much smaller at the beginning stages of harvest, as low as 10 cents per bu. at one Manitoba elevator.
Analysts encouraged growers to contract as much wheat as they could at those prices because they knew the spread was going to expand, and that is what happened.
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Voth said the discounts will eventually narrow again, but it may take until next fall based on conversations he has had with grain buyers.
“They’re saying internally that these spreads can even get worse,” he said.
On the flip side, elevators are paying premiums for high protein wheat.
John Duvenaud, publisher of Wild Oats Grain Market Advisory, said the elevator he deals with is paying a six cents per bu. premium for every one tenth of a percentage point above 13 percent.
He said farmers are being paid more for their protein this year than they usually do because of two successive years of disappointing protein levels in the U.S. hard red winter wheat crop.
The average protein level in 2017 was 11.4 percent and the year be-fore that it was 11.5 percent. Those are both well below the five-year average of 12.6 percent.
“We’re short of protein, and this is the only place you can find it,” said Duvenaud.
A farmer on Agriville.com’s commodity marketing forum said he is not thrilled with the way the spread works because the discount for every one tenth percentage point drop in protein levels is twice what the premium is for the same size increase.
The average Canada Western Red Spring protein level in the Canadian Grain Commission’s 2017 harvest sample program is 13.1 percent, which is below the 10-year average of 13.4 percent.
Daryl Beswitherick, program manager of quality assurance standards with the commission, said 40 percent of the crop is above 13.5 percent protein and 40 percent is below 13 percent.
Customers looking for high protein wheat shouldn’t be too disappointed given that distribution.
“There is a good percentage of the crop that will meet that market,” he said.
Beswitherick acknowledged it could be difficult marketing low protein wheat. Elevator companies will have to blend to boost protein levels.
He said other quality factors were superb with much of the crop making the top two grades.
“We still always have one issue and its lower protein, so it’s not the perfect year but it was pretty close,” said Beswitherick.
Protein is not an issue with other types of wheat. The average durum protein level is 13.6 percent, well above the 10-year average of 12.9 percent, and the Canada Prairie Red Spring wheat crop was bang on its long-term average of 12.1 percent.
Voth said he has seen a lot of high-yielding, low protein wheat in southern Manitoba, where summer rainfall was sparse.
“Everybody was kind of looking forward to an easy year of wheat marketing after last year’s quality issues and then this year it becomes this debacle instead,” he said.
However, Voth said farmers need to keep things in perspective. A 40 to 50 cent per bu. discount is easily offset by 70 to 90 bu. per acre yields.
“As much as it sucks to take a discount like that, at the end of the day it’s still a very profitable number,” he said.
“Bushels trump protein premiums or discounts.”
