Reuters reports that a combination of well-fertilized fields and hot, dry weather is leading to the highest-protein U.S. spring wheat crop in five years, and former high premiums for protein are evaporating.
MGEX spring wheat futures are trading near a three-month high due to the small crop, closing at $9.50 per bushel on Thursday, and the Minneapolis premium over Chicago Board of Trade wheat remains at about a two-month high.
But with half of the crop harvested, the wheat had an average protein content of 15.1 per cent, up from averages of 13.7 per cent and 13.2 per cent during the past two years, according to the U.S. Wheat Associates.
Two months ago, rail cars of 15 per cent protein wheat delivered to Chicago were priced $5.10 per bushel above the benchmark MGEX futures price while 13 per cent wheat was 80 cents above futures, according to USDA data. Last week, the price was the same for 13 or 15 per cent protein.
The southern U.S. Plains HRW wheat harvest also had higher-than-normal protein this year while some lower-quality HRW supplies are being used as animal feed after wheat prices fell below corn for the first time since 1996.
“The market is saying we don’t need to pay up for protein. The market is going to have to pull those lower proteins out now,” Country Hedging analyst Tim Emslie told Reuters.