Canada Markets

Prairie Wheat Protein Lags Long-Term Averages

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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The red bars represent the year-to-date mean protein levels across the 10 crop regions on the Canadian Prairies. Regions 1, 2 and 3 represent southwest, northwest and eastern Manitoba, regions 4 to 7 represent southeast, southwest, northeast and northwest Saskatchewan, while regions 8 to 10 represent southern, central and northern regions in Alberta. The green bars represent the respective 10-year average mean protein levels. (DTN Graphic by Nick Scalise)

To date, 1,490 samples of 1 CWRS has been graded by the Canadian Grain Commission. Of the 2,761 samples graded, 1,490 have graded 1 CWRS (54%), 879 samples graded 2 CWRS (31.9%), 292 samples have graded 3 CWRS (10.6%) and 96 samples have graded CW Feed (3.5%).

The highest protein on the prairies is found in the three crop regions of Manitoba (Regions 1 to 3), where protein ranges from 13.2% to 13.3%, as well as the central Alberta region (Region 9), with the mean protein at 13.2%. The six other regions range from 12.2% protein in southwest Saskatchewan (Region 5) to 12.8% in northeast Saskatchewan (Region 6). The simple average across the 10 crop regions is 12.84%.

The green bars on the attached chart represent the 2003 to 2012 average protein for each of the ten crop regions. To date, 2013 protein levels lag the 10-year average anywhere from 0.55% in Regions 1 and 7 to 0.89% in Region 5.

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The larger volume of lower-protein stocks on the prairies has had implications in terms of protein spreads in the red spring trade. One measure of these spreads is seen in CWB payments. The final payments for the 2012/13 crop year realized in the CWB's harvest pool indicate a $3.54/mt grade spread between 1 CWRS (12%) and 1 CWRS (13%), while the spread between 1 CWRS (13%) and 1 CWRS (14%) was also $3.54/mt and the jump from 1 CWRS (14%) to 1 CWRS (14.5%) resulted in a further premium of $1.77/mt. The crop year was defined by historically high protein, with 1 CWRS across the 10 crop regions ending with a final protein ranging from 13.1% to 14.2%, with the simple average of the 10 regions at 13.7%. Protein spreads were narrowed, while premiums for higher levels were nonexistent.

The CWB's first Pool Return Outlook for the 2013/14 crop year which indicated spreads between various levels of protein was seen in the Aug. 15 report, where premiums were announced at $2/mt for each 1/2 percent, starting at 12.5% protein and ending at 14.5%, or $4/mt per each one percent, similar to the previous year.

A sign of the changing markets was seen in the PRO released in the Oct. 10 report. Here protein premiums varied, with the move from 12% to 13% resulting in a $12/mt premium, while the move from 13% to 14% resulted in an additional $6/mt premium and the spread between 14% and 14.5% was $3/mt.

Similar trends can be noted in Pacific Northwest Dark Northern Spring bids. On Aug. 1, the first day of the Canadian crop year, the spread between 13% and 14% was 19 cents/bu, while the spread from 14% to 15% was an additional 1 cent and the spread from 15% to 16% was a further 1 cent. Note that these spreads were calculated using either the prevailing bid for the day, if reported, or using the mid-point of the range of bids reported in the daily Pacific NW Wheat Basis Report, released by USDA.

On Sept. 30, the spread between 13% and 14% was 72.5 cents/bu, from 14% to 15% an additional 52.5 cent/bu premium was offered and from 15% to 16% a further 50 cents/bu.

There exist a number of methodologies used to price wheat on the prairies, including varying base grades and protein premium and discount structures, while there are also comments surfacing suggesting wild protein swings from company to company. It is important to know what you have in terms of grade and protein and understand the manners in which companies assess price in order to market as effectively as possible.

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

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