Nitrogen in wheat can help manage profitability
The 2011 Kansas wheat harvest featured unusually high protein levels. On average, the crop yielded at least 11.5 percent protein; in some areas, protein values were as high as 19 percent.
Protein is an important component when selling wheat on a global market. Wheat is one of the world's most widely grown (and consumed) grains; yet, Hard Red Winter wheat featuring good quality - that of 11 percent and above - is more difficult to procure. In the global marketplace right now, there is real concern that while wheat stocks are high, stocks of high-quality wheat are quite short.
Mike Stewart, southern and central Great Plains director of the International Plant Nutrition Institute, and Kim Anderson, professor and extension economist at Oklahoma State University, wrote an Insights paper for the IPNI called, "Pay Close Attention to Nitrogen Fertility of Winter Wheat This Season," which descripes the value of high-protein wheat to wheat farmers.
Grain protein content is influenced by the fertilizer practices on the crop, Stewart writes. Wheat requires about 2.0 to 2.5 pounds of available N per bushel of grain produced. (Where wheat is grazed, about one pound of N is required for each three pounds of animal gain per acre).
Besides its effect on protein content, shortages of N may cause reduced tillering, reduction in head size and poor grain fill. Stewart says a combination of preplant and topdress application is preferred on wheat, in order to improve use efficiency, minimize investment risk and safeguard the environment. Stewart advises topdress applications be made early, prior to jointing.
Meanwhile, Anderson writes that there is money to be made by managing N, and by proxy, protein content. The practice of price premiums paid for protein is routine for Hard Red Spring producers, but not so common in the Hard Red Winter wheat producing areas of the central and southern Great Plains. That could change in 2011-2012, the economist says.
Anderson says the difference between wheat contract prices is often based upon the value of protein. In November, the basis for 11% protein was about 35 cents at the Kansas City Board of Trade, for HRW. The basis for 12% protein was about $1.05; for 13%, $1.33. At the same time in 2010, the basis for 11% protein wheat was minus 35 cents; 12% was 10 cents. The current HRW winter wheat basis for protein is about 70 cents higher than in 2010.
The economist cautions that protein basis doesn't suggest that wheat prices will remain at current levels. Here's why: world wheat stocks are above average, yet protein wheat stocks are tight. Prices for wheat less than 11% protein may decline while prices for wheat with relatively high protein may maintain current levels. The odds are that protein premiums will remain into the 2012 U.S. winter wheat harvest.
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