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Protein premiums drop from historic high in 2018

Shopping around can reveal how buyers are grading your wheat and how they pay for protein premiums

The 2018 crop year featured a strong protein premium for wheat, in particular hard red spring wheat. Neil Blue, provincial crop market analyst with Alberta Agriculture and Forestry, looks at the situation with protein premiums on wheat in 2019.

Blue says that wheat protein premiums this crop year have dropped back to below-average levels due to increased supply of higher protein wheat in the world. These crops include the dryness-reduced U.S. hard red winter wheat crop as well as European and post-Soviet state crops.

“In Alberta, this year’s protein premium is around two cents per bushel per one-tenth per cent of protein,” says Blue. “Although, the protein premium may vary from one buyer to another.

“Some buyers may quote that protein premium as 10 cents per bushel for a half percentage point of protein. Last spring, the protein premiums for wheat were historically high, averaging about five cents per bushel per one-tenth per cent protein point.”

He adds that for an individual buyer, the protein premium may differ at different protein levels. “For example, last year for some half-point protein increments, the premium was as high as eight cents per bushel per one-tenth point of protein. Over the last several years in Alberta, the average protein premium for wheat has been from 3.5 to four cents per bushel per one-tenth per cent protein level.”

Have a sample

As for some marketing strategies, Blue says that taking representative samples as grain is placed into storage and using the Canadian Grain Commission’s (CGC) Harvest Sample Program are a good start.

“There is no charge for the program during the harvest sample submission period, and the CGC provides for wheat the grade, protein and DON levels as well as the falling number,” he explains. “Although considered unofficial, that CGC grading information can then be used as a reference by producers in their marketing.”

The next step is shopping around widely to learn how buyers are grading your wheat and also learn the grade, protein and other grade aspect price differentials that each buyer is applying.

“On that note,” says Blue, “I realize that producers have encountered variations from buyer to buyer in grading, but I advise that producers should try to collect as much information about buyers’ prices as possible on which to base their sale decisions.”

Blue adds that producers who disagree with an assessed grade on delivery to a licensed primary elevator can request that a sample from that load be sent to the CGC for a grade assessment. “That grade will be the final grade for settlement. I know that producers are reluctant to challenge a grade factor, but that is a right of producers and the method that should be acceptable to buyers to maintain good relationships with producers.”

For more information about wheat protein premiums, contact Neil Blue at [email protected] or 780-422-4053.

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