AUSTRALIAN wheat producers need to carefully monitor the potential for a protein market to emerge in the wheat sector according to a Rabobank grains and oilseed analyst.
Ben Larkin said downgrades to the European crop, particularly in France and Germany had meant the world was monitoring stocks of higher protein wheat, but added there were other factors leading towards a premium emerging for the high protein lines.
“Russia has had a massive year production-wise, but as is often the case with bumper yields, the protein can fall away,” Mr Larkin said.
He also said the hard red winter wheat crop in the US, another key component of the world’s higher protein wheat supplies, was down on protein due to a cool and wet finish.
“It is a similar story to Russia, the yields are there, the protein is not.”
Mr Larkin said he expected buyers would be looking for wheat above 11.5 per cent in protein.
He acknowledged this may be difficult for Australian growers to target given many are also having a good season and forecasts for a relatively kind finish to the growing season, consistent with lower than average protein levels.
However, he said some farmers he had spoken to during a national Rabobank roadshow this month had floated the possibility of nitrogen applications for protein, rather than yield gains, should the spreads open up sufficiently.
“They have said nitrogen is relatively cheap so it is something that might be looked at.”
Nathan Cattle, managing director at NZX Australia, said at last month’s Australian Grains Industry Conference growers’ day that farmers needed to make their grain stocks work for them.
“Load allocation is going to be critical this year, by doing it carefully and allocating the right loads to the right contracts you can drag your average price up, which is going to be critical in a year where values could be down.”
“The idea is to get your highest grade grain into the contracts with the highest premiums and the opposite, put your lower grade lines into contracts with the lowest discounts.”
Mr Larkin said Rabobank had a forecast for an Australian wheat crop of 26.7million tonnes, but added that this figure could increase with good spring conditions.
He said basis may present a problem in the lead-up to harvest as those with old crop stocks look to clear room for the upcoming harvest.
Internationally, wheat futures prices rallied to their highest values for the month last week but have given back most of those gains this week.