PDQ and grade/px spreads

[farmaholic]

If you don't think grade and protein don't matter, sign a contract with a US mill for #1 CWRS 13.5% px and deliver #2 CWRS 12% px.

Whats your explanation?

Lots of better quality wheat around this fall compared to the last couple of years might explain the lack of difference.

My explanation of the importance of the specs and the possible reason of lack of difference is better than dragging the defunct CWB into it with an explanation of a facade price schedule.

If for a minute you think the current marketing environment hasn't allowed the handlers to extract more of the value of grain for themselves, well.... . And that was my "Oh, come on...." explanation, sorry I wasn't more specific. Thought it was obvious.

[tweety]

I don't have an explanation. Its why i asked.

[farmaholic]

There is my two cents worth, possibly worth exactly what it cost this forum---nothing.

If you feel I owe you an apology, consider it done, I'm sorry.

You and others must have an opinion. Let's here them.

[stonepicker]

Same old story, good wht. is easier to sell than poor wht.as long as you have 13.5 protein you have nothing to worry about.When their is a shortage of high protein wht. in the world, then protein will be worth more.

[tweety]

farma, nothing to apologize for at all, i just am wondering why.

I really don't think we will ever again see much difference between a #1 and #2 and anything much different above 12 or 13% px.

Someone must have some knowledge in this area. I do not.

[wmoebis]

Positive work being done on milling barley with wheat. Once we can use barley at least partially replace wheat in the baking industry, wheat may drop even more in price.

[jdepape]

Supply/demand prices everything - even protein.

In 2010-11, the premium for 1% of protein (14.0 over 13.0) in the U.S. got as high as $3.50/bu ($128/t). For most of the year it was around $2/bu ($70/tonne).

That same year the CWB reported the premium got as high as $100/t - and the average for the year was about $60/tonne.

For what its worth, that year the CWB protein premium (14 over 13) in the pool accounts was about $26/tonne ($34 below the average for the year).

The following year (11-12) the premium was about $0.50/bu in the states. And the first year of no Single Desk (12-13), it was about zero to $0.25/bu - about where we are now.

When you produce more of something than the market needs, we all know what that means to price.

[tweety]

jdepape, if this was 2011 what would we be seeing for spreads in the "new" marketing world? Do you think there would be protein premiums paid to farmers or would any premiums just be realized by grain companies?

Its not like they have to pay farmers for protein when they could just keep for themselves.

Not whining, just asking.

[jdepape]

The graincos in the US pay protein premiums - can't think of why we wouldn't here. We are all still transitioning to the new market - everyone has lots to learn.

Information is key. Access to good information is vital. We're working on it.

[farmaholic]

I remember being told before, and again today by a different buyer, that its a penny per tenth above either 13-13.5 (might depend on location). And today's conversation also pointed out two cents per tenth discount below those base levels.