Farmers in the northern U.S. Plains are harvesting a bin-busting spring wheat crop, but much of it has a lower-than-normal protein content, industry experts said.
“We have one of the lowest average protein contents that we’ve had in the spring wheat crop in years,” said Mike Krueger, president of the Money Farm, a grain market advisory service near Fargo, North Dakota.
Samples collected and analyzed by North Dakota State University roughly halfway through the harvest showed the average protein content of the Hard Red Spring wheat crop running at 13.7 per cent, about one full percentage point below normal.
Krueger said some North Dakota farmers were harvesting wheat with as little as 10 per cent protein – comparable to the levels for soft wheats used in crackers and cakes.
Given the large supply of low-protein wheat, farmers in the region are facing discounts at grain elevators of up to $1 per bushel for each percentage point below the par grade of 14 per cent.
Wheat industry groups are struggling to find a market for the low-protein crop at a time when big harvests across the Northern Hemisphere have produced a global wheat glut.
On Sept. 18 the Minnesota Wheat Research and Promotion Council, the North Dakota Grain Growers Association and North Dakota Wheat Commission suggested in a joint report that spring wheat farmers store their grain or put it under the government loan program while the market adjusts to the influx of low-protein supplies.
Meanwhile, premiums for high protein are soaring as domestic flour mills and exporters compete for scarce supplies of top-quality wheat.
In the Minneapolis cash market, the best bid for wheat with 15 per cent protein surged Sept. 18 to $4 over the Minneapolis Grain Exchange December spring wheat futures contract, which settled at $4.96-3/4 per bushel.
Because of its high protein, Hard Red Spring wheat is often blended at the mill with lower-protein wheats to boost the baking performance of flour.
Given the steep protein premiums, some millers may find ways to substitute lower-protein wheat, eventually building demand for more of this year’s spring wheat crop. But these adjustments take time, which is why growers may benefit from storing their grain for later sale.
“History shows that discounts are usually the greatest right at harvest. Once people figure out how to use (this year’s crop), those discounts will narrow,” said David Torgerson, executive director of the Minnesota Association of Wheat Growers.
The U.S. Department of Agriculture has projected that North Dakota farmers will harvest 256 million bushels of spring wheat this year, with an average yield of 40 bushels per acre – the third highest in state history.