NEWS for North Dakotans
Agriculture Communication, North Dakota State University
7 Morrill Hall, Fargo, ND 58105-5665
July 29, 1999
George Flaskerud, Extension Crops Economist
NDSU Extension Service
The hard red winter wheat (HRW) protein content and hard red spring wheat (HRS) growing conditions point toward protein premiums possibly increasing into fall. The highest premiums are likely to occur during the September-November period, when a number of peaks have occurred historically.
A 34-bushel average HRS yield for the United States would indicate a 79-cent peak in the monthly average protein premium during September-December on the Minneapolis spot cash market for 15 percent protein HRS, relative to 14 percent. A 32-bushel average would suggest a peak of about 66 cents while a 36-bushel average would suggest a peak of about 93 cents. These projections are based on historical relationships between previous peaks in protein premiums, July premiums and HRS yields. The premium was 58 cents on July 22.
The premiums projected in the Minneapolis spot market should be observed and used as a guide for making sales. Premiums at most local elevators are unlikely to be this high since they are usually based on the to-arrive cash market rather than the spot market. Premiums on the to-arrive market on July 22 were 25 cents for delivery in Minneapolis and 30 cents for delivery in Duluth--considerably below the 58 cent premium in the spot market.
The level of protein in the HRW crop supports a substantial premium. The average protein content of the 1999 Kansas HRW wheat crop is 11.3 percent (12 percent moisture), according to a Kansas Ag Statistics Report released July 23. This was the average protein content from 7,239 carlot samples representing 61 counties. Last year's crop averaged 11.5 percent while the five-year average was 12.2 percent and the 10-year average was 12.4 percent.
A protein content near the 10-year average would be expected for HRS in North Dakota, as of July 26. An average North Dakota HRS yield of 31 bushels per harvested acre, as USDA projected on July 12, would suggest a protein content in the neighborhood of 14.4 percent (12 percent moisture). A 33-bushel yield would suggest 14.2 percent while a 29-bushel yield would suggest 14.5 percent. These estimates are based on historical relationships between yields and protein content, while the protein that materializes will depend on weather during the growing season. The protein content of the North Dakota HRS crop was 14.5 percent in 1998 while the five-year average was 14.3 percent and the 10-year average was 14.4 percent.
USDA projected a U.S. average HRS yield of 34 bushels per harvested acre, about the same as a year ago. This is the yield that was used to project how much of a premium might be paid for 15 percent protein in the Minneapolis spot cash wheat market.
The protein premium projections also depend on the July average premium for 15 percent protein, relative to 14 percent protein, in the Minneapolis spot cash wheat market. Daily closes of HRS prices during the July 1-22 period resulted in an average premium of 33 cents.
Crop conditions may point to a lower average HRS yield than what USDA projected on July 12 and the possibility of an above-average protein content. The HRS crop was rated 64 percent good-excellent as of July 25, compared to 69 percent the previous week, 68 percent on July 11 and 71 percent on July 4. USDA's Crop Progress/Condition Report indicated that 14 percent of the U.S. winter wheat crop remained to be harvested as of July 25, compared to 19 percent the previous week and 14 percent a year ago.
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Source: George Flaskerud (701) 231-7377
Editor: Dean Hulse (701) 231-6136