High-protein wheat will remain in short supply, despite heavy harvest


High-protein wheat will continue in high demand, after disappointing quality levels in the US hard red winter wheat harvest, Rabobank said.

"US high-protein markets will maintain wide premiums over feed going forward, with potential to widen even more," said the bank.

Front-month Minneapolis spring wheat is trading at a $1.16 ѕ a bushel premium to Kansas wheat, a four-year high.

Bin busting harvest

Rabobank saw the premium supported by the fact that despite a "bin busting" hard red winter wheat harvest, quality was disappointing.

Heavy yields often coincide with less than stellar quality, an effect that has also been noted in Russia this year.

"When we see these big yields coming through quality can be compromised," Charles Clack, at Rabobank, told Agrimoney.

…but low quality

The disappointing crop quality in the central plains, which saw hard red winter wheat averaging just 11.2% protein, compared to 12.3% last year, is increasing demand for high protein spring wheat.

"We're expecting that Minneapolis will be used by the millers to increase quality," said Mr Clack.

"With EU quality notably poor and some quality questions being raised in the Black Sea and Australia, we see both futures and cash-quality spreads maintained," Rabobank said.

And the spread could even widen, if unwanted rainfall develops during the US and Canadian spring wheat harvest, Rabobank said.

Wheat prices to rise, a little

Rabobank trimmed its wheat price outlook slightly, citing harvest pressure, and "overbearing stock levels".

The bank is bullish on prices, although given Chicago and Paris markets are at multi-year lows, prospects are not seen as stellar.

"We now expect seasonal price lows to be upon us in the short term, as greater certainty surrounds the Northern Hemisphere harvest.

But the bank expects "the huge availability of global feed grains, particularly US corn, to limit a significant price recovery".

Chicago wheat is seen averaging $4.15 a bushel over last three months of 2016.

December wheat futures are currently trading


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