PROTEIN PREMIUMS HIGH IN 1927 



By E. J. Bell, Jr., Agricultural Economist, and Clyde McKee, Agronomist) 



Data compiled by the departments of Agricultural Economics and Agronomy 

 of the Montana Experiment station show that in 1927 higher premiums were paid 

 for high protein spring wheat at Minneapolis than ever before in the history of 

 that market. The average premium on No. 1 Dark Northern Spring with 14 per 

 cent protein was 19 cents per bushel in August and 37 cents in December. The 

 average premium for the same grade of wheat with 13 per cent protein rose from 

 13 cents per bushel in August to 26 cents in December; and the average premium 

 for wheat with 12 per cent protein advanced from 7V2 cents in August to 12 cents 

 in December. Individual sales, however, have brought premiums much higher 

 than these averages. On January 16, a car of No. 3 Dark Northern Spring Wheat 

 containing 16.75 per cent of protein from Colorado sold at 70 cents over the price 

 of May future. 



It must be understood that "premium" means the amount paid over the future 

 price for a particular lot of actual wheat and not the amount paid over the card 

 price by the local buyer. If a miller pays a premium of 20 cents per bushel for 

 a car of wheat he pays 20 cents more than the future price. If the future price 

 at the time he makes his purchase is $1.25, he pays $1.45 for the wheat. This 

 is merely a convenient way of computing prices and has become a custom on 

 most of the large wheat markets. It is also well to note that protein is not the 

 only factor which determines the premium. Test weight, moisture, damaged 

 kernels, foreign material, variety mixtures, and other factors also have a marked 

 effect on the premium paid. 



The exceptionally high premiums which have been paid for quality wheat this 

 year are due largely to the low average protein content of the 1927 crop. Out of 

 8121 cars of Montana wheat received at Minneapolis last fall only 4 per cent 

 tested 14 per cent or over, while 45 per cent of the cars tested below 12 per cent 

 protein. The low protein wheat from Minnesota, North Dakota and South Dakota 

 was marketed earlier than the Montana crop and this large supply lowered the 

 premiums paid for Montana wheat containing 12 per cent or less. 



Thus, a large portion of the 1927 wheat crop was shipped and sold before the 

 premiums started to rise. Of 32,376* cars of wheat shipped from Montana points 

 from August 1 to December 31, 1927, 15,672 cars, or 45 per cent were shipped 

 before October 1 when premiums for 13 per cent protein were less than 20 cents 

 per bushel. In the latter part of December, after the heavy movement of grain 

 had ceased, premiums on wheat of the same quality rose to 30 cents per bushel. 



A plausible explanation of this December rise in premiums for wheat of high 

 protein content would be that the grain trade had not previously realized the 

 relatively small supply of wheat containing 14 per cent protein and over. Another 

 explanation offered is that terminal elevator buyers needed this high protein 

 wheat to mix with the large supply of low protein grain already accumulated. 



Although the average protein content of the Montana wheat received at Min- 

 neapolis last fall was slightly over 12 per cent, the average premium has been 

 estimated at nearly 10 cents per bushel. Only 10 per cent of Montana spring 

 wheat this year has sold at higher premiums than 20 cents and 7 per cent has 

 sold at no premiums at all. 



The material gathered shows premiums for hard red spring wheat only. No 

 adequate figures have been made available to show the premiums on hard red 

 winter wheat of different protein content. 



*Data from Montana Railway Commission. 



MONTANA PROTEIN LOWER IN 1927 



The hard red spring wheat produced in Montana in 1927 averaged 12.21% 

 protein acccording to data collected on over 15,000 samples. The tabulation below 

 will show that the crop of 1927 averaged lower in protein than any other 

 crop during the past five years. 



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