CNS Canada –– Every year is a different story for wheat crop quality and protein levels — but the saturation of high-protein wheat in the market may mean fewer premiums for Prairie growers this year.
The premium price for high-protein wheat has eroded to the point where there’s a shift from grain companies in the type of wheat they’re looking for, said John De Pape of Farmers Advanced Risk Management Co. (FarmCo).
The laws of supply and demand dictate that when there’s a healthy supply of protein, the premiums paid for it will drop, he said.
When protein levels are too high, not only will grain companies not pay a premium, they may not be interested in that wheat at all, he added.
Canada Western Red Spring (CWRS) wheat at 14 per cent protein will fetch about $2.19 per tonne over the base level. Canada Western Amber Durum (CWAD) at 13.5 per cent protein will bring in a $1.15 per tonne premium above the base level, according to PDQ, which compiles an average from across Western Canada.
Price premiums across protein spreads are variable. But a government report said the former Canadian Wheat Board payments for 2006-07 — another high-protein crop year — offered premiums of $4.56 per tonne for CWRS, 14.5 per cent protein.
“One thing that’s important to remember is there’s a very narrow market for high-protein wheat to begin with. There’s not that many buyers,” said Neil Townsend of G3 Canada, formerly CWB.
There aren’t many products that require a higher protein, so grain companies buying high-protein wheat often need to blend it with lower-protein wheat.
— Jade Markus writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting. Follow her at @jade_markus on Twitter.