Manitoba wheat growers have a grain marketing mystery on their hands this year.
There was no doubt the year was dry. Weekly crop reports put rainfall below average across most of the province, and it was less than half of normal in the driest parts of central Manitoba for most of the year.
Given that, it was no surprise when initial post-harvest crop reports pegged wheat protein at 13.5 per cent or higher. High protein is typically seen in dry years.
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There were just a few problems.
Several producers noted they weren’t seeing those rosy protein numbers. Then grain company actions suggested protein might be a concern.
Delmar Commodities, for example, had protein discounts and protein premiums in play, according to mid-September quotes shared with the Co-operator.
The presence of premiums, which farmers rarely see if protein is good, left them scratching their heads.
Why it matters: Manitoba farmers should be able to capitalize on increased demand for high-protein wheat amid global scarcity.
Fortunately, many of those corporate signals are underpinned by overseas market pressures rather than a lack of local protein.
“I would say that generally, worldwide, the protein levels are a little bit hit or miss,” said Neil Townsend, chief market analyst for consultancy firm GrainFox. “In other words, there’s enough of a problem that people are seeking out protein or better-quality wheat.”
Those market pressures may benefit Manitoba producers over those in Alberta and Saskatchewan.
“Manitoba wheat is going south, in part to the U.S., but it’s also being drawn to the east to go through the St. Lawrence [River],” Townsend noted.
From there, it is in more direct competition with wheat from Russian and Ukrainian markets, as well as the rest of Europe.
“If they feel in Europe and the Black Sea that they’re a little bit tighter on protein and a little bit tighter on quality, then it would stand to reason that we might see an impact in Manitoba,” Townsend said.
As it turns out, tight protein is exactly the situation in Europe. Townsend said heavy rains during the Ukrainian and Russian harvest lowered grain quality. Ukraine’s wheat crops aren’t generally top quality in the first place, he said, although Russian wheat typically is.
“Russia can have a quality that is comparable to a mid-grade CWS, like a two or even a one.”
Russian wheat has gained market share in Peru, Mexico and Nigeria in recent years, he added, displacing some Canadian and U.S. product.
This year’s rain, and the subsequent quality drop in Russian wheat quality, has propped up demand for high-protein wheat globally.
“That ends up opening the door for more blend opportunities for North American spring wheat,” Townsend said.
Pricing parameters eventually work their way back to Manitoba.
Protein demand is also swayed by a large harvest of soft red winter wheat, which is generally a lower protein variety, and a historically small hard red winter wheat crop in the U.S., thanks to drought.
“The bigger yield is usually negatively correlated with protein levels, so their protein is probably average or below average on that [soft] wheat,” said Townsend. “That increases the value of spring wheat with a solid protein.”
Hard red winter wheat doesn’t match spring wheat quality, Townsend added, but still generally beats soft red winter wheat ,so a smaller hard red winter wheat crop likely has U.S. also seeking protein. However, he thinks most of the impact is due to global factors.
“I would say [it’s] 75 per cent global market, 25 per cent North American dictating that spread.”
Farm reports
Most crop experts in Manitoba say this year’s wheat protein is a positive story.
Anne Kirk, Manitoba Agriculture cereals specialist, echoed the previous crop reports. Most put protein at over 13.5 per cent, she said.
However, those levels aren’t being observed across the board.
“It’s not like we’re seeing a lot of low-protein wheat. But in some areas, people are seeing wheat in that 12 to 13.5 range,” she said. “And since 13.5 is typically the cut off, anything below that could potentially result in a penalty for lower protein.”
Kirk said she can’t pinpoint a specific area where protein is lower but areas with lower yields, in most cases, won’t have anything to worry about when it comes to protein.
“Yield and protein are negatively correlated, but there are genetic factors and environmental factors as well,” she said. “I would say that protein is good across the province this year. We aren’t seeing too many reports of low-protein wheat.”
That also tracks with what Cereals Canada is seeing, both in Manitoba and across the Prairies.
The organization collaborates with grain exporters to obtain samples of commercially representative Canada Western red spring (CWRS), Canada Western amber durum (CWAD) and Canada Prairie spring red (CPSR) wheat varieties.
“We’re trying to understand what quality can be expected at harvest,” said Elaine Sopiwnyk, vice-president of technical services for Cereals Canada. “We always have to temper what we hear with how it’s all going to turn out at the end.”
Cereals Canada has started to receive samples, and Sopiwnyk said it has a good sense of the bigger market picture based on discussions with exporters.
“For CWRS, we’re looking at a very good year with protein that is probably equal to last year or slightly higher,” said Sopiwnyk. “We’re seeing good falling numbers and no real issues overall with sprout damage.”
In terms of downgrades for CWRS, Sopiwnyk said the primary concern is hard vitreous kernels, but there could also be downgrades due to mildew and frost stress.
For CWAD, protein is expected to be similar to last year or slightly higher. There is no concern with sprout damage or falling numbers, Cereals Canada says.
Sopiwnyk pointed out that very little CWAD is grown in Manitoba, but in the dryer areas of Saskatchewan and Alberta, lower test weight was the primary downgrading factor.
The CPSR protein will also be similar to 2022. Protein there is expected to range from 12.7 to 12.9 per cent, said Sopiwnyk, and they are not expecting major issues with sprouting or falling number. Overall, she said the crop for CPSR is expected to be No. 2 or better.
“It was an up-and-down kind of year,” she said. “Very regionalized, very localized weather concerns. But, overall, I think that we have a good quality crop and good quality information to share with customers this year, and there shouldn’t really be any major concerns.”
