Milling & Baking News - December 6, 2016 - 7

Editorial

Many consequences of quality fall

f one is searching for the best way to describe suitable mainly for feed. Any hope that summer
this crop year 's wheat market, especially from feed demand would reduce unusually large supthe American point of view, nothing is better plies of poor quality wheat has not been realized.
than how an experienced trader said it. "If there Wheat feed use in 2016-17 is forecast by the Ecois a story in wheat this year it's quality and lots nomic Research Service at 260 million bushels,
of feed wheat" is the succinct comment. The "sto- up nearly 110 million from the prior season but
ry" reference is to the forces driving wheat prices. more than 100 million short of the record feed
Yet, from the perception of this publication and its use in 2012-13. Feed wheat demand is checked
dedication to helping executives in milling and by corn prices influenced by this year 's massive
baking understand what accounts for moves in corn harvest.
wheat, it is invaluable. That is particularly so in
Quality issues in wheat this season are unusual
a season like this when many explanations have in that they are not driven by poor growing conmissed the mark.
ditions or undesirable varietLooking to the best guidies. This year 's growing conMillers seeking to meet their
ance to make sense of price
ditions for hard red winter
bakery customers' quality
movements in 2016-17 one
wheat have hardly ever been
requirements must search
obvious choice centers on
better. Yet, it is that positive's
constantly for suitable supplies.
price spreads for hard red
role in raising yield to a new
winter wheat in Kansas City. The spread recent- peak of 52.6 bushels per acre that weighed on fuly between ordinary wheat and 12% protein was tures, while creating problems for millers in buy103 cents per bushel, whereas ordinary wheat ing sufficient quantities of the quality needed. It
was only 15 cents lower than 12% protein a year is the corn price that is posed to be the most likely
ago. That current protein premium, equal to $1.85 influence on lower quality wheat. Early in the seaper hundredweight of flour, is a significant cost son corn was at a wide enough discount to act as
attributed to shortfalls in protein in this year 's a limit on feed wheat use. March corn in Chicahard winter crop.
go is at a discount of 54 cents to the same wheat
A conventional offset to this year 's reduced delivery whereas that ratio should be near zero
protein supply in hard winter wheat is looking to to spur wheat feeding.
spring wheat. Alas, the lower quality problem in
Export prospects for wheat, early this season rethis year 's wheat harvest is not limited to the Unit- sembling the 2015-16 slow pace, have perked up.
ed States, but extends to other parts of the world The E.R.S. forecast still lags the billion bushels that
that have turned to American supplies in a virtual not long ago was seen as a minimum. While no one
global scramble for protein. Thus, the March hard currently forecasts runaway foreign demand, poor
spring contract in Minneapolis is more than $1 per harvests in Canada, Australia and Europe have
bushel above the same delivery in Kansas City. In combined to boost demand for quality U.S. supcash wheat, 14% protein spring wheat in Minne- plies. World corn production for the second time
apolis trades nearly $1.50 higher than the 12% in will exceed 1 billion tonnes, and corn demand is at
Kansas City.
a pace holding its ending 2016-17 carryover slightMillers seeking to meet their bakery customers' ly above a year ago. The global ending wheat stock
quality requirements must search constantly for is on the way to increase for the fourth year. Carsuitable supplies. That is the case regardless of the ryover gains are associated with price weakness.
crop year, but this year 's wheat buying has been This axiom is reinforced by what has happened in
made more difficult by the dominance of grain wheat in 2016-17. MBN
MORTON SOSLAND, EDITOR-IN-CHIEF
WE'RE EAGER TO GET YOUR FEEDBACK: E-mail editor@sosland.com or write to us at
Milling & Baking News, 4801 Main Street, Suite 650, Kansas City, Mo, 64112
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