It’s early days but the grain pipeline is working smoothly in wake of the new open market for wheat and barley
So far, so good.
That sums up Western Canada’s 2012-13 crop year following the introduction of an open market for wheat and barley Aug. 1. But it’s still early days, say grain company officials.
“It’s really too early to say a lot on the logistics side,” Ward Weisensel, CWB’s chief operating officer, said in an interview Sept. 6. “We’re pretty comfortable with where we’re sitting right now, but we need to see how this plays out. There’s huge demand on the West Coast (export capacity) and there are going to be challenges. But we’re comfortable with where we’re at.”
The grain pipeline has been running smoothly, said Wade Sobkowich, executive director of the Western Canadian Grain Elevator Association, which represents the major grain companies operating in the West.
“Our members say they are generally pleased with how the transition has gone,” he said in an interview Sept. 10. “But it’s still early and there are still things to be worked out.”
Although much of Manitoba’s cereal and canola crop is in the bin, harvest farther west is just getting underway. That means the grain pipeline has yet to be fully tested.
Much of the grain that’s been shipped so far is still old crop, Weisensel said. He expects by October most of the grain moving through the system will be new crop.
Western farmers are expected to harvest a bigger-than-average crop, according to Viterra. So far grain quality and protein have been excellent and that generally makes grain handling more efficient, Sobkowich said.
In 2008, when Australia introduced an open market for wheat, grain exports bogged down due to a combination of railway problems and exporters, anxious to secure market share, overselling the country’s export handling capacity. But in an earlier interview CWB president and CEO, Ian White, an expatriate Australian, said Canada’s grain-handling system is different in that most grain companies own their own port facilities.
Canada’s grain transportation system still has the same potential problems as it did before the Canadian Wheat Board lost its monopoly over the sale of western wheat and barley destined for export or domestic human consumption.
“Regardless of the system if there is something that disrupts it like an avalanche or huge rainfalls that will bear upon everyone, as it has in the past,” Weisensel said.
“We’re going to be focused on our program as everyone else will be focused on their programs. I’m confident people will work these things through, but time will tell.”
There are reports CP Rail hasn’t been keeping up with car orders, but Weisensel said it has more to do with harvest being further advanced on the southern Prairies where CP Rail does most of the grain shipping.
According to the Canadian Grain Commission’s weekly statistics as of Sept. 2, there was slightly more wheat, but 30 per cent less canola in the system compared to the same period last crop year.
Farmer wheat deliveries were up 42 per cent, while canola deliveries were down eight per cent.
It’s too early to read much into those figures, Weisensel said. Most of the difference probably reflects this year’s earlier harvest.
Spring wheat protein is averaging around 13.5 per cent, which is higher than it has been for several years, Weisensel said. That’s putting pressure on protein premiums, with some companies not paying a premium on protein of more than 13.5 per cent.
“If it continues to come off like I’m expecting (in the top grades) then I would expect you’d see protein premiums narrow in from what farmers have seen in recent years,” he said. “Through our pools that differential is still there, but I think overall when you have more protein it tends to be less valuable.”
The CWB is still urging farmers to sign up for its early delivery and harvest pools. The deadlines are Sept. 28 and Oct. 31, respectively.
“Our early delivery pool is a first come, first served,” Weisensel said. “One thing that’s true is capacity is tight; there is not unlimited capacity for early delivery into the system. From our perspective it’s important that farmers make decisions as quickly as they can, particularly to the early delivery pool, but even the harvest pool may be limited by what capacity is available.”