The prospect of decent Canadian and US crops may put the brakes on an uptick to quality premiums on international markets being spurred by concerns for rain-hit crops in parts of Europe.
The Canadian Wheat Board, which paid farmers Can$87 per tonne more for top-grade Canadian red spring wheat in 2011-12 than the grade three equivalent, forecast that for 2012-13 the premium would drop to Can$35 per tonne.
The dynamic contrasts with the dynamics in Europe, where fears that rain will prompt downgrades to milling wheat in parts of France, Germany and the UK have driven milling premiums higher.
Paris milling wheat futures for November has risen by 28%, since the grains rally started in mid-June, while London feed wheat for November has risen by less than 20%, adjusted for a strengthening in sterling.
'Protein spreads to remain relatively narrow'
The board - the world's biggest barley, durum and wheat marketing group before losing its monopoly over Western Canadian sales at the start of this month – said that "North Ameican spring wheat areas are in relatively good shape.
"If favourable conditions persist through harvest, quality and protein spreads will remain relatively narrow."
Indeed, it highlighted the "prospect of narrower spring wheat grade spreads" if harvest weather proves benign".
In the US, 63% of spring wheat was seen in "good" or "excellent" condition as of late July, down seven points year on year but still considered a strong result for a crop which is better-developed than last year, with ratings tending to decline nearer to harvest.
In the main US spring wheat state of North Dakota, hot weather boosted quality, the Wheat Quality Council found after a tour last month.
In the major Canadian growing province of Saskatchewan, 84% of spring wheat was rated in good or excellent condition, a little ahead of the 80% a year before.
In Europe, however, FCStone's Rory Deverell flagged that milling premiums were "appreciating" on "quality concerns follow very wet summer in the north west".
The French harvest, the EU's biggest, "will be near complete by the end of this week with good yields and mixed quality recorded," Mr Deverell said.
Paris-based consultancy Agritel said: "Harvests in France are very influenced by rains, and fears are growing particularly on quality of grains, especially in northern Loire."
The UK, albeit largely a producer of feed wheat, has been the subject of persistent cautions over the impact of wet weather in promoting the spread of fungal disease.
The Canadian Wheat Board added that the comments over premium extended to durum, the type of wheat used in making pasta, and which in Europe has seen overly dry weather cut yields in some major producers, such as Spain.
"North American production is forecast to increase from last year by 2.1m tonnes to 7.7m tonnes," the CWB said.
"This additional Canadian and US tonnage will compensate a 500,000-tonne reduction in EU durum production."
The jump in net output meant "durum premiums over spring wheat will be under pressure", said the board, flagging new-crop prices in St Lawrence running at Can$390-300 per tonne.