Farmers face protein and price issuesAlthough area producers saw nice yields on their crops this season, officials say lower protein levels and an overabundance of wheat may hurt producers wishing to sell.
By: Beth Wischmeyer, The Dickinson Press
Although area producers saw nice yields on their crops this season, officials say lower protein levels and an overabundance of wheat may hurt producers wishing to sell.
Frayne Olson, a crops marketing economist with the North Dakota State University Extension Service, said for the past few years, commodity prices in general have been good, but with good yields often comes low protein.
“In western North Dakota yields have been phenomenal,” Olson said. “Often when you have good yields the protein isn’t as good and vice versa. Protein is a major issue for wheat producers in the state.”
Buyers usually like to see 14 percent protein, but Olson said protein levels in the area are between 12 and 13 percent.
“The whole state had such great yields, but the protein level is below normal,” Olson said. “Right now we have a shortage of wheat 14 protein or better. As of now there’s about $1 to $1.20 drop from 14 to 13 protein, but on the flip side, 14 protein to 15 protein can add 80 cents to the dollar.”
Prices have rebounded somewhat, he added, but he cautions farmers to take the opportunity to sell their wheat while they can.
“We’ve seen a recovery in the last few weeks, I think farmers are being more optimistic than they have been,” Olson said. “We have a very large supply worldwide, the entire world had good yields. The prices may get high enough that international buyers may go elsewhere.
“We can see some rallies, so consider those to be opportunities to sell some wheat. The prices won’t stay the same for months on end, the window will open and close very quickly.”
Late last month, the Dakota Resource Council urged North Dakota’s Congressional delegation to investigate possible price-fixing in connection with wheat protein discounts.
“Given the high level of concentration in the wheat processing industry, there is great opportunity for price-fixing in the area of protein discounts,” says DRC’s letter.
DRC member Todd Leake of Emerado, who sent the letter to the delegation, says wheat markets suffer from “buyer power,” a kind of mirror image of monopoly, where a huge number of sellers must deal with only a handful of buyers.
So far, the group hasn’t received much in a way of an answer from the delegation, a DRC official said.
Paul Lautenschlager, general manager of Beach Co-Op Grain Company said the past few years the market has been the highest he’s ever seen them and the lowest he’s ever seen them.
“The price of durum has been staying about a dollar below the spring wheat price,” Lautenschlager said. “There is just no demand for this durum. There’s nobody to sell to sell it to and nobody to buy it.”
Lautenschlager said he’s aware of some grain still on the ground due to lack of storage.
“People have room now, but it’s on the ground by choice,” Lautenschlager. “They could haul it in, but they’re not happy with the price or thinking it’s worth more or the protein’s so low. But the different elevators I’ve talked to have room.”