Market Morsel: Being moist brings a premium for protein.

Grain | 5th December 2023 | By Andrew Whitelaw

Market Morsel

The El Nino was announced, but we have still had a pretty moist couple of weeks as we have tried as a nation to get into harvest.

The map below shows how wet it has been compared to normal for November; this is especially the case in the eastern states.

Australia always seems to create some kind of struggle to keep the harvest going longer than needed!

We all know that a wet finish can lead to losses in quality, but lower protein levels can come to the fore in particular. So what does that do for price? In the charts below, we will look at Port Kembla.

The first chart below shows the spreads from APW1 to both H2 and ASW. We can see that ASW is becoming more discounted, and H2 is receiving a higher premium.

This is classic supply and demand. The wetter season means more low protein, so that drives the price down for lower protein grades.

The second chart below displays the average December spread. The H2 spread is the highest since 2016, a very moist year. The ASW spread is also hitting pretty large discounts, at similar levels to recent years when volume was extremely high.

The question is whether protein premiums will increase. That will depend on the weather, but we can see that we are pricing premiums and discounts for protein at close to the highs.

(Please note cover photo is AI generated image)