(Reuters) — A mild growing season for spring wheat in the northern U.S. Plains produced better-than-expected yields, but the protein content valued by flour millers and bakers is likely to be the lowest in at least three years, crop experts said on Thursday.
With harvest more than halfway complete, the lower protein returns have kept a lid on export demand from top buyers such as Japan for hard red spring wheat, which contains the most protein among U.S. wheat classes and is used for bread and pizza crust.
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“Farmers are certainly pleased with the yields and obviously the big yields tend to be lower protein,” said Jim Peterson, marketing director of the North Dakota Wheat Commission.
Peterson said yields so far in North Dakota, which produces nearly half of the spring wheat grown in the United States, were as low as 25 and as high as 80 bushels per acre but overall were “good.” The U.S. Agriculture Department estimated the spring wheat yield at 42.8 bpa, down from 45 in 2012.
Protein content could average in the mid-13s, compared to 14.6 percent protein in the last two years — the highest levels in a decade, data from the Wheat Commission showed.
Benchmark spring wheat futures at the Minneapolis Grain Exchange demand 13.5 percent protein while the more widely grown soft red winter wheat traded at the Chicago Board of Trade typically has less than 10 percent protein.
While the spring wheat crop represents just a quarter of the total U.S. wheat harvest, it is one of the highest quality varieties, along with the durum wheat prized by pasta makers. Spring wheat is favoured for baking harder breads. Soft red winter wheat is used for biscuits, crackers as well as animal feed.
Japan is the top buyer both of total U.S. wheat and spring wheat but has purchased the smallest amount of U.S. spring wheat for this time of year since 2000, according to USDA.
“The quality has been kind of the outlier here. The protein is just not impressive,” said Tregg Cronin, who farms 8,500 acres of spring wheat and other crops in South Dakota.
“The (USDA) export projection probably looks a little lofty,” Cronin added.
The trade group U.S. Wheat Associates hosted a delegation of flour millers from Japan last week to visit mills, grain elevators, ports and farms to examine the new wheat crop.
Sales are still lagging. Spring wheat exports are 11 percent behind last year’s pace even as export sales of all wheat varieties are up 38 percent.
When wheat plants are stressed by excessively dry or wet conditions, protein concentration increases, even as overall grain yield declines. Mild temperatures and frequent rains this summer led to good yields and lower protein, just as more extreme weather led to elevated protein during 2011 and 2012.
USDA estimated the spring wheat crop at 511.28 million bushels — five percent smaller than last year due to fewer planted acres in North Dakota, Minnesota and Montana.
The government this week said the spring wheat harvest was 64 percent complete, behind the average pace of 69 percent and falling far behind 93 percent done during the same week last year.
Many growers are choosing to store their wheat rather than sell to local grain elevators or mills with MGEX futures hovering near the lowest levels in almost three years.
“Farmer selling has been pretty minimal compared to what would be ideal,” said Austin Damiani, an analyst at Frontier Futures who works from the Minnesota exchange.
The slow sales and lower protein have supported cash prices. Spring wheat containing 15 percent protein recently traded at a $1.95 per bushel premium above futures, compared to only 85 cents above futures for 12-percent protein wheat, according to USDA data.
