Canada Markets

December hard red spring wheat futures are giving up hard-fought gains achieved this month, while bids in the Pacific Northwest market continue to reflect concerns over higher protein supplies.

The attached chart reflects both the widening spread between the 13%, 14% and 15% protein levels, as well as the narrowing of the daily trading range which also indicates firming demand.

For example, on Sept. 2, the difference between the upper end of the 13% trading range and the upper end of the trading range for 15% protein was 60 cents per bushel (U.S. dollars), which is reflected by the difference in basis levels quoted as cents/bushel over the December future.

By Oct. 1, this same spread, or the difference between the upper end of the trading range for 13% protein as compared to the upper end of the trading range for 15% protein was $2.90/bu.

Also of interest is the recent collapse in the daily trading range reported by the USDA for the Portland market. On September 2, the daily trading range for 13% protein was $1.30/bu to $1.85/bu over the future, or 55 cents/bu. By Sept. 19, daily trade was reported to have taken place in a range between 50 cents and $1.80/bu over the December future, or $1.30/bu. In the past two days, this trading range has collapsed to $1.90/bu to $2.05/bu over the December, or just 15 cents/bu, as sellers exercise their market power while meeting the demand of the buyers.

While the full extent of these market spreads does not exist on the Canadian prairies at present, it may take time for the market to adjust to the new reality where quality milling supplies could be tight on a global basis. Knowing what you have in terms of quality is paramount, while holding these supplies later into the crop year could prove to be an effective marketing strategy.

As of Oct. 7, the mean protein for Western Canada was reported by the Canadian Grain Commission to be 13.3%, based on tests of 369 samples of 1 CWRS. The 653 samples of 2 CWRS also resulted in a mean protein of 13.3%. As of this date, 63% of samples graded a 1 CWRS or 2 CWRS, with 37% grading a 3 CWRS or Canada Feed. Note that there is far more harvest to take place, with today's Saskatchewan Crop Report indicating only 71% of the spring wheat has been harvested as of Oct. 6.

While there has largely been insufficient samples submitted to tabulate crop protein over the ten regions of the prairies, the breakdown by province would indicate the 1 CWRS protein mean for Manitoba to be 13.6%, to be 12.8% in Saskatchewan and 13.3% in Alberta and British Columbia.

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

Follow Cliff Jamieson on Twitter @CliffJamieson

(AG)

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