Grains

Protein levels in focus as wheat harvest ramps up

Henry Wells, November 1, 2016
Hands with grains of wheat

The price spread between APW1 grade and the high protein grades will establish a pattern

PROTEIN is the buzzword for wheat crops harvesting anywhere between now and Christmas.

The northern hemisphere has finished harvesting a colossal crop of wheat, which means bread-flour millers across the world have adequate grades of wheat, and at prices that, to the Australian farmer, look cheap.

Protein levels around the world aren’t anything to write home about.

Millers have seen prices of base-grades shift in their favour, and around USD $200/metric ton will see a 68,000 mt cargo of milling wheat sent by ship to the port of your choice.

However, the price spread between, say, APW1 grade and the high protein grades of wheat, will establish a 2016 pattern after Australia’s crop is in the bin and people have had a chance to take a good hard look at where they might get what they need.

Segregate on protein for premiums

The feed sector (grains and other feedstuffs) is a market segment at base grades.

Milling wheat commentators remind growers to be strategic, and to plan for segregation of wheat grades, which allows choice as to timing of sales and deliveries.

Growers might spread their sales among the raft of ‘products’ in the system, or in other commercial storages, or on-farm.

Wheat parcels have started to trade off the header.

Growers with the ability to segregate loads on protein (with accurate test results) can reap premiums.

Currently the bid range between the bottom grades of stockfeed wheat classification and the top grades of high protein milling wheat is about $100 a tonne.

High yields of lower protein will require blending

Millers strive to create flour to their customers’ standard specification. Wheat grains are not standardised, so this year of high yields (likely lower protein) will require supply-chain participants to blend small proportion of expensive high-grade with larger proportion of cheaper base grade to achieve standard specification.

Australia’s very longstanding buyers in Japan purchase Australian high protein prime hard wheats to mill high quality flours for food manufacturers.

End-users in several other key Asian markets are developing similar aspiration for the high end of Australia’s wheat crop.

In its series analysis of competition in global grain, the AEGIC noted that competitors such as Ukraine are less able, compared to Australia, to reliably satisfy the wheat volume and wheat quality needs of end-users in Asian markets.

The advice of the report’s authors was that Australian growers have time to take strategic action to counter the greater competition.

“Failure to adopt a well-coordinated approach, which minimises fragmentation and duplication, will weaken Australia’s response to these challenges,” the report said.

Planning for segregation of wheat grades, which allows choice as to timing of sales, is part of this strategy.

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