Wheat protein levels are worse than originally anticipated, which means more of the 2009-10 crop will be sold into lower value markets, says the Canadian Wheat Board.
In September, when half of the spring wheat crop had been harvested, CWB officials thought protein levels would come in around the long term average. The five and 10 year averages are 13.5 and 13.8 percent respectively.
By late October, they had ratcheted expectations back to 13.2 percent. Last week, the board released its latest edition of the GrainMatters newsletter, which stated the crop is projected to have a well-below average protein content of 13 percent.
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“If you were fortunate enough to have high protein spring wheat this year, the returns are going to be significantly higher than for the lower proteins, unfortunately for those people,” said Bruce Burnett, the CWB’s director of weather and market analysis.
The latest Pool Return Outlook shows a 79 cent per bushel difference between No. 1 CWRS wheat with 13.5 percent protein content and the equivalent grade with 11.5 percent content.
Burnett said cool weather and high yields contributed to the “huge spread” between high and low protein wheat, which is expected to remain in place until the new crop year.
Producers in Manitoba and Saskatchewan had disappointing protein levels while those in Alberta collectively exceeded last year’s average.
Average protein levels for the prairie region as a whole are reminiscent of the 1996 crop but that’s where the similarities end. The 2009-10 crop is an anomaly because low protein levels are showing up in the top two grades, whereas it is usually associated with No. 3 or lower quality wheat.
Burnett estimates there are two to three million more tonnes of low protein wheat in the higher grades than normal. Some of that spring wheat has protein levels below winter wheat.
The upshot is a lot more Canadian wheat than usual will be heading to low value markets where it will be competing with some of the lowest-priced wheat in the world.
“On the lower protein side, there is a lot more competition,” said Burnett. “It translates into lower prices.”
The good news is there is stronger than expected demand for wheat. The CWB anticipates 13.5 million tonnes of exports, up one million tonnes from its November estimate.
Burnett said there has been an increase in exports to countries in the southern hemisphere and the Asia Pacific regions and there should be new demand emerging in the Middle East and Africa in the coming months.
