SINGAPORE (Reuters) - Global premiums for high-protein wheat are expected to rise as unseasonal rains drive down quality in key producers, while Chicago futures are likely trade in a tight range in the next few months, a leading Singapore-based trader said on Wednesday.
Wet weather at the time of harvest has left large volumes of wheat only fit for animal consumption in leading exporters such as Canada and Australia.
"This year is going to be the year of lack of proteins, even the Canadians have had wet conditions towards their close," Vijay Iyengar, managing director of Agrocorp International, told Reuters as part of its Global Commodities Summit.
"Proteins are going to be scarce and the market is going to price accordingly."
The spread between soft red wheat traded on the Chicago Board of Trade Wv1 and protein-rich spring wheat on the Minneapolis Grains Exchange 1MWEc1 has widened to $1.18-3/4 a bushel after trading almost at par in September.
Iyengar said Chicago wheat futures would trade in a range of $3.80 to $4.20 a bushel on the ample availability of lower-protein grain.
"The world in awash with low-quality wheat right now."
Chicago wheat prices dropped to a 10-year low of $3.59-1/2 a bushel at the end of August as back-to-back years of near-record output are expected to boost global inventories to an all-time high of around 250 million tonnes this year.
Iyengar said he expected India to buy up to 4 million tonnes of wheat. Millers in the South Asian country have already booked about 1.5 million tonnes since June following lower production in the past two years.
Privately-owned Agrocorp has four plants for processing pulses and grains in Canada, and is on the look out to acquire more facilities in Canada, Myanmar and Australia.
The company, with an annual turnover of $2 billion, sells wheat, corn and rice in Asia. It is among the top five pulse suppliers in the world.
Iyengar said there were unlikely to be further deep declines in corn Cc1 and soybean prices Sc1, which also hit multi-year lows earlier in 2016.
"Corn seems to have found a level now, the only reason that it is not moving higher is because of feed wheat availability," he said.
"For soybeans, the market was of the view that prices would go down to $9.00 a bushel, but they seem to have found a level at $9.50."
For pulses and peas, Iyengar said global output would likely rise with higher planting in India, Canada and Australia in response to high prices last year.
"The way the Canadian dollar is, the prices of pulses are still good for exports, harvest pressure on the market is over," he said.
"There will be demand in India for Australian chickpeas as the domestic crop only comes into the market by March and April."
Reporting by Naveen Thukral; Editing by Joseph Radford