A large harvest of low quality wheat in Ukraine, combined with lower quality winter wheat from the U.S., may lead to greater demand for quality, high protein spring wheat, says a U.S. market analyst.
“Throughout the winter wheat areas (in the U.S.) protein was lower than normal,” said Kim Anderson, an agricultural economist at Oklahoma State University. “I think there’s potential for a protein shortage.”
According to U.S. Department of Agriculture estimates, wheat production will be higher in the United States and Ukraine. The U.S. is expected to produce 2.46 billion bushels, up from 2.07 billion bu. last year. Ukraine’s wheat production is expected to come in at 22 million tonnes, the largest harvest in 18 years.
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However, a low quality crop, especially in Ukraine, should create more demand for hard spring wheat, said a Canadian Wheat Board analyst.
“What it should do is make the higher protein, higher quality crops more valuable because there will be more required for blending purposes,” said David Boyes of the CWB.
The percentage of Ukrainian wheat classified as feed has risen to 88 percent, according to a release from Ukraine’s agriculture ministry, reported by Dow Jones.
Vasily Melnik, head of the State Agricultural Products Quality Commission, said that 88 percent of the crop is classified as fourth grade to sixth grade wheat, as heavy rains soaked fields this summer and lowered crop quality.
The numbers are a reversal from last year, when 72 percent of the Ukrainian crop was suitable for milling.
There are also protein problems in European and Russian crops.
The prospect of a low quality world wheat crop has stabilized a market that was falling on reports of a record sized harvest in many parts of the world.
“With the HRW (hard red winter) crop lower protein than people had been expecting, with 80 percent of the Ontario crop going as feed … what we’re now seeing is huge swaths (of that record crop) is not milling quality wheat,” said Boyes.
Meanwhile, the harvest of hard red spring wheat has just started in Western Canada and is underway in the northern grain belt of the U.S.
Farmers in North Dakota are harvesting a crop that looks average to good, said Erica Peterson, marketing specialist with the North Dakota Wheat Commission.
“In the western part of the state we did see some heat stress, so yields are down in that area, but protein’s high,” said Peterson. “When you get farther east, yields are above average.”
Across Western Canada the crop is looking “really nice,” Boyes said, but he cautioned that it still has to get in the bin.
Boyes added that if the weather holds, there should be a payoff for farmers who produce high quality spring wheat.
“I don’t think there’s any question that higher protein wheats are going to be more valuable than we’ve been thinking in the last few months,” he said.
