This week's USDA Crop Progress Report showed the spring wheat crop condition falling from 38% good to excellent to 37% during the week ending June 13, well below the 81% reported for this week in 2020 and the lowest estimate reported for this week since 1988.
The spread between DTN's National Spring Wheat Index and the National HRW Index has moved from a low of minus $0.11 USD on Feb. 24 (HRW over HRS) to a high of $1.61/bushels (bu) as of June 4 (HRS over HRW), down to $1.03 on June 14 and up to $1.20/bu on June 15. This is viewed as a signal of the demand for protein, or high protein spring wheat relative to the lower protein HRW.
During the past three Canadian crop years (Aug. 1 through July 31) this spread has averaged $1.02/bu USD, while during the past five years, this spread has averaged $1.10/bu, with prices favouring the higher quality spring wheat crop. So far this crop year, this spread has averaged $0.29/bu.
As seen on the attached chart, the basis for No. 1 DNS FOB Portland, based on the upper end of the daily range reported, has remained steady and this market has yet to show signs of panic. The spread from 13% protein (blue line) and 16% protein (yellow line), has even narrowed by 3 cents this month, which is the narrowest spread seen in 2021.
The spot basis for 13% protein of 94 cents over the July, reported on June 15, compares to the three-year average of $1.06/bu over, based on the upper end of the reported range. The 14% protein basis at $1.10/bu over compares to the three-year average of $1.30/bu over. The basis for 15% protein of $1.18 over is below the average of $1.42 over and the basis for 16% of $1.26 over compares to the three-year average of $1.54/bu.
The new-crop basis for September delivery is slightly stronger than the three-year average at $1.15/bu over, which compares to the average of $1.13/bu.
It is early days in the winter wheat harvest. The June 11 U.S. Wheat Associates Weekly Harvest Report indicates Oklahoma protein averaging 11.5%, which compares to the 2020 final estimate for the entire crop at 11.9% and the five-year average at 11.6%.
Cliff Jamieson can be reached at email@example.com
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