Weather hurts harvests | Rain on South American wheat harvest contributes to global protein shortage
On Nov. 8, analysts were eager to receive the first U.S. Department of Agriculture’s World Agricultural Supply and Demand Estimates report in two months.
The report was slightly bearish for grain with a modest increase forecast in the U.S. wheat crop and in world ending stocks.
Meanwhile, there is a quality story unfolding in wheat markets because of heavy harvest rain in South America, said CWB weather and crop specialist Bruce Burnett.
“(The country) to watch very, very closely is Brazil,” he said.
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There are reports of quality problems in the state of Parana, while rain has disrupted Rio Grande do Sul’s harvest.
“Certainly it’s an area to keep an eye on because of the harvest difficulties they’ve had this year,” said Burnett.
If the quality problems are serious, Brazil will need to import significant quantities of wheat with protein levels found in Canada’s spring wheat crop and the U.S. hard red winter wheat crop.
Argentina also has quality problems. Rain has alleviated the worst drought in that country in 50 years, but it is causing more problems with an already poor wheat crop.
“There is a winter wheat quality issue that’s building,” said Drew Lerner, president of World Weather Inc.
Most of central Argentina received 76 to 177 millimetres of rain around the beginning of November, including a big portion of the drought region.
There were follow-up showers, and Lerner was forecasting heavy rain for the weekend as of Nov. 9.
“If there is any more rain, I think that the quality will be a real issue,” he said.
Canadian farmers harvested a wheat crop that was low in protein but of good overall quality.
“We don’t have any obvious defects that are of large concern to millers like low falling numbers or things like that,” said Burnett.
“It’s not a hard sell.”
The mean protein level of the 1,822 No. 1 Canada Western Red Spring wheat samples analyzed by the Canadian Grain Commission as of Nov. 5 was 12.8 percent, which is 0.8 percentage points below the long-term average. The U.S. crop was also low in protein.
“In a nutshell, that’s why the protein premiums on the North American side have widened out significantly,” said Burnett.
There is a 40 to 50 cents per bushel premium for hard-to-find 13.5 percent wheat over 12.5 percent wheat.
He expects the premium to remain until the next spring wheat harvest in North America, unless there are unusual protein levels in the U.S. hard red winter wheat crop, which comes off earlier.
Burnett said there are quality problems in the Black Sea region because of harvest rain in Kazakhstan, the Urals and Siberia. However, it was a decent quality crop in the region’s exporting area.
Winter wheat seeding got off to a terrible start in Russia and Ukraine with major delays caused by wet, cold fall weather.
Lerner said conditions have improved greatly with warm weather in late October that helped seeding catch up.
“It’s much less of an issue over there for right now,” he said.
