Canada Markets

The available supply of high quality hard red winter wheat continues to pressure hard red spring wheat prices, more commonly known for its superior protein used to meet high quality baking needs.

USDA data pegs the HRW wheat production for 2013 at 744 million bushels (20.25 million metric tonnes), which represents 35% of the U.S. crop. The average protein level for the 2013 crop is 13.4%, which compares to 12.6% in 2012 and the five-year average of 12.2%.

The U.S. spring wheat crop is reported at 490 mb (13.3 mmt), which represents 23% of the total crop size. Protein for this crop averaged at 13.5%, which compares to the 14.6% average in 2012 and the five-year average of 14.1%.

During the U.S. Durum Growers annual meeting in Minot, N.D. in November, grain miller presentations reported that given the relative qualities of the two classes of wheat from the 2013 harvest, they were essentially viewed as equivalents in the U.S. industry.

The average spread in 2011, derived from the monthly chart, was 91.98 cents/bu. (HRS over HRW), which fell to 70.02 cents in 2012 and further to 25.63 cents in 2013. Prior to the spread turning negative in September 2013 with HRW overtaking HRS in price, the last time HRS traded at a discount was a short period from July through September in 2007, while also trading at a discount over most of 2006.

Chart support remains at the nearby low of minus 19 1/4 cents, as seen on the daily chart (not shown), while the longer-term monthly chart indicates a range of support between minus 20 1/2 and minus 26 3/4 cents/bu. Today's close ended at minus 14 1/4 cents after widening 8 3/4 cents in this week's trade.

Cliff Jamieson can be reached at cliff.jamieson@dtn.com

(ES)

© Copyright 2014 DTN/The Progressive Farmer. All rights reserved.