For once the stars have aligned in favour of farmers. Wheat exports from Canada are moving at a blistering pace while prices remain relatively strong.
Canadian Wheat Board (CWB) grain movement since October has been well above the five-and 10-year average and could be the biggest since 1999-2000.
The only potential fly in the ointment will be if farmers slow down their grain deliveries during spring seeding.
“With the projected large (export) programs unfortunately we’re going to need the farmers to deliver during their busiest time – seeding,” Mark Thibeault, the CWB’s senior manager of supply optimization, said in an interview March 20. “We’ve got the sales on the books so we have to find ways to encourage producers to find ways to deliver.”
The CWB especially needs No. 1 and 2 Canada Western Red
“We’re going to need the farmers to deliver during their busiest time – seeding.”
– MARK THIBEAULT
Spring wheat and No. 1 Canada Western Amber durum, he said.
The prospect of perhaps not being able to deliver all the wheat they’d like later this crop year, with pool returns projected to be the second highest ever, should be an incentive for farmers to deliver the wheat they’ve committed, Thibeault said.
The February Pool Return (PRO) for No. 1 CWRS, 12.5 per cent protein is $8.08 a bushel in-store. While that’s almost $2 a bushel lower than what farmers earned last crop year, it’s $2.75 a bushel more than the previous three-year average and second only to last year’s historic high.
If deliveries drop, ships won’t get filled on time, farmers will pay demurrage, and port terminals could plug up. That would force the CWB to reduce the number of grain trains it sends, resulting in lost transportation capacity and perhaps lost sales. Then the CWB could be trying to sell more wheat in June and July when prices are pressured by wheat harvests in the United States and Europe.
Grain movement got off to a slow start in the 2008-09 crop year because of record low carry over stocks, Thibeault said. But by September grain movement was average and above average every month since.
He credited three factors:
The biggest all-wheat crop (25.5 million tonnes) in the West since the 25.3 million tonnes harvested in 1999.
Lots of railway capacity. Other rail traffic from intermodal, to automobiles and lumber has declined due to the recession.
From October to February, the CWB cleared 7.7 million tonnes of wheat, durum and barley, up from the 10-year average of 6.8 million.
West Coast ports cleared 4.2 million tonnes of CWB grains compared to the 10-year average of 3.9 million.
Weekly car unloads of CWB grains at Vancouver have averaged around 3,800, well above the 2,500 or seen normally.
The CWB’s winter rail program, which moves grain from Thunder Bay to transfer terminals in the lower St. Lawrence River, is expected to be well above the 10-year average of 8,701 cars and exceed the previous record of 9,806 cars.
Last month the CWB exported 1.024 million tonnes of grain from Vancouver, well above the 10-year average 778,000 tonnes.
“We have moved more than a million tonnes in each of those months (October to February),” CWB spokeswoman Maureen Fitzhenry said in an e-mail.
“For March we are expecting total exports of almost 1.3 million and about 1.2 million for April – the two biggest months so far this year.”
Earlier this year, the CWB said it expected to export 17.6 million tonnes – 12.7 million of wheat, 3.35 million of durum and 1.6 million of barley. Fitzhenry said the target has been boosted, but she declined to say by how much. She did say it will be the biggest CWB export year since 1999-2000 when Canada exported 20.5 million tonnes of wheat, durum and barley.
Ironically, wheat exports from Australia, one of Canada’s main competitors, are bogged down due to slow trains, inefficient ports and recent deregulation of the wheat export monopoly. That country is struggling to market its 10-million-tonne wheat crop, up 4.4 million tonnes from the previous year when drought cut production.
Mike Chaseling, deputy chair of the Australian grain-exporting firm, Emerald Group Australia Pty Ltd., told a recent outlook conference in Canberra that port facilities operated by CBH, another exporting company, were plugged because of a rush to ship grain soon after harvest, according to a story published by the Australian newspaper The Land.
Chaseling said CBH was working hard to fix the problems. Demurrage costs on delayed shipment to Iran were estimated to be $30,000 a day. [email protected]