The prospect of decent Canadian and US crops may put the brakes on an uptick to quality premiums on international markets being spurred by concerns for rain-hit crops in parts of Europe.
The Canadian Wheat Board, which paid farmers Can$87 per tonne more for top-grade Canadian red spring wheat in 2011-12 than the grade three equivalent, forecast that for 2012-13 the premium would drop to Can$35 per tonne.
The dynamic contrasts with the dynamics in Europe, where fears that rain will prompt downgrades to milling wheat in parts of France, Germany and the UK have driven milling premiums higher.
Paris milling wheat futures for November has risen by 28%, to E260.25 a tonne, since the grains rally started in mid-June, while London feed wheat for November, at £190.00 a tonne, has risen by 19.3%, adjusted for a strengthening in sterling.
'Protein spreads to remain relatively narrow'
The board - the world's biggest barley, durum and wheat marketing group before losing its monopoly over Western Canadian sales at the start of this month – said that "North Ameican spring wheat areas are in relatively good shape.
"If favourable conditions persist through harvest, quality and protein spreads will remain relatively narrow."
Indeed, it highlighted the "prospect of narrower spring wheat grade spreads" if harvest weather proves benign".
In the US, 63% of spring wheat was seen in "good" or "excellent" condition as of late July, down seven points year on year but still considered a strong result for a crop which is better-developed than last year, with ratings tending to decline nearer to harvest.
In the main US spring wheat state of North Dakota, hot weather boosted quality, the Wheat Quality Council found after a tour last month.
In the major Canadian growing province of Saskatchewan, 84% of spring wheat was rated in good or excellent condition, a little ahead of the 80% a year before.
'Quality concerns' ...
Source: Argentine Beef Packers S.A.
Back to News Headlines