Wheat Harvest Sized

As western Canadian farmers decide what type of wheat to plant this spring, analysts say they expect the price spread between high protein and feed wheat will likely remain tight well into summer.

The premium for high protein wheat has been much smaller than normal due to tight feed supplies stemming from the US drought, and ample supplies of high protein wheat.

"The spreads are probably going to remain quite narrow as the corn stocks situation is so tight. Feedgrains are at a premium obviously," says Bruce Burnett, weather and crop specialist with CWB. "If we were to see some rains arrive in the US hard red winter wheat area, and projections for lower proteins on the new crop, that's when we could possibly start to see some of the protein premiums move."

Dave Reimann, market analyst with Cargill, echoes Burnett.

"From a short-term perspective, there's not much opportunity for protein premiums to really sharply improve. We might see some small movement, but for sharp improvements we're going to have to wait to see what the 2013 harvest around the world turns into," he says.

He says the first major indicator will be winter wheat quality in Kansas.

"If we get into the Kansas harvest in June and July and it's lower than average protein, we should start to see those premiums improve, but if their crop is average protein - 12 percent or higher - then we'll probably see another pretty flat year of protein premiums," explains Reimann.

Farmers in western Canada may even be able to react to the protein situation in Kansas, says Reimann.

"I'm no agronomist, but we've seen opportunities at times if there is a low protein crop coming off in Kansas, it may mean better protein premiums to come, so there may be an opportunity for spring wheat growers to do a little top-dressing and get a little extra protein out of their crops," he says. "However, if the Kansas crops are coming off at above-average protein, it probably limits the amount of protein premium you will get, and you might be better off saving some money on the top-dressing and waiting for the yield instead."