North Dakota wheat farmer Terry Weckerly applied extra fertilizer to his wheat this summer to coax more protein out of the crop. Flour mills and grain elevators were paying near-record premiums for high-protein wheat and he wanted a slice of it.
The fertilizer worked too well. Weckerly and other farmers are harvesting a crop with protein content of more than 15 per cent. The protein-richest crop in five years has led to those high premiums evaporating.
Scorching weather in July stressed the crop, which usually leads to lower yields even as the wheat plants devote more energy to protein production.
However, premiums for higher protein wheat which this March had soared to more than $6 per bushel above Minneapolis Grain Exchange spring wheat futures the highest since 2008 are now gone due to an abundance of it, replaced by a dynamic some grain industry insiders have not seen in a decade: a push for low-protein spring wheat.
We re going from famine to feast, said a manager at a Canadian grain elevator, who like several of the dozen grain merchants interviewed was not authorized to speak on the record.
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 premiums have basically disappeared, said Dan DeRouchey, general manager of Berthold Farmers Elevator near the North Dakota- Minnesota border.
The southern U.S. Plains HRW wheat harvest also had higher-than-normal protein this year. We re looking for anything below 13 per cent protein right now, said a grain buyer at a Kansas flour mill.