Can anyone explain - DPC $ Spreads

[tcunningham]

Can anyone explain the huge drop in spreads in the last ten days. Protein is protein.

[carebear300]

I would think that because of the drought all over the protein content of the wheat is higher than usual so then the premium paid for higher protein will be less. Am I right?

[melvill]

Typically, in years of a very high quality wheat crop here and in the U.S., the price spread between high-grading/high protein wheat and lower-grading/lower protein wheat shrinks. The reason, of course, is that the market doesn't need high prices for high grades that encourage or force millers and other buyers to limit consumption by switching to lower grades whenever possible.

This year, so far, US hard red winter wheat quality - protein content and other measures - is very high. Early harvest U.S. HRS wheat quality is also very high. And, Canadian weather, so far, and likely very early harvest indicates that our wheat crop will be of very high quality, too. Unless, of course, the drought and heat results in downgrading due to shrunken kernels.

[charliep]

Have been looking for a chart that provides US protein spreads and can't find (maybe someone else has seen). You can get an idea of the daily protein spread off the various USDA web sites (Montana example below).

http://www.ams.usda.gov/mnreports/BL_GR110.txt

For the reasons carebear300 and Lee provided, I would not be over optimistic on protein premiums.

[GrainVac]

don't hold your breath for a protein bonus...excerpt from Agriline Aug 21

NORTH DAKOTA WHEAT is nearly all 1 DNS with average test weight of 60.4 lbs., protein at 15.25, zero damaged kernels, 11.5% moisture and high falling numbers. Quality is lower in South Dakota, where the harvest is all but done