The record-setting pace of western grain moving to port thus far could see a three-peat when the 2020-21 crop year ends July 31.
Canada’s grain monitor Mark Hemmes, president of Quorum Corporation, speculated in an interview in October 2020 — less than three months into the current crop year — it was possible grain moved by rail from country elevators to export terminals could set a record in 2020-21 — the third in a row.
For starters, 2020 western grain production of 77.745 million tonnes was a record, just slightly above 2013’s record of 77.021 million.
The other requirement would be good rail service and that happened too with the railways setting a new record almost every month
“It’s (another record) very doable,” Hemmes said in an interview June 10.
“All you’ve got to do is move five million tonnes (of grain in June and July) and you’ve broken the record.”
Why it matters: Moving grain to export is essential. When record volumes are moving it means more revenue for everyone in the grain chain and ultimately Canada’s economy.
Last crop year a record 58.6 million tonnes of western grain moved by rail to export ports, up from 2019-20, which also saw record grain movement.
A three-peat isn’t guaranteed, Hemmes noted. Farmer deliveries to country elevators, which generally taper off near the end of the crop year, have been doing just that.
Bruce Burnett, director of markets and weather at MarketsFarm, suspects last year’s record won’t be broken because grain stocks are tighter than average and drought-wary farmers haven’t been as eager to sell. (MarketsFarm and the Manitoba Co-operator are owned by Glacier FarmMedia.)
“I don’t think we are going to hit those records for a couple of reasons,” Burnett said in an interview June 8. “First of all if you look at the numbers last year right about now grain exports were starting to accelerate.
“Another thing is since we’ve been on this torrent export pace there are little stocks of things like canola and barley, which were part of the program last year. There aren’t the stocks available to market for the next six weeks. Drought, or no drought, I think probably our stocks are getting very, very tight historically speaking. It would be very difficult for those commodities to go beyond what was purchased but not brought into the commercial system yet. It certainly has slowed down.”
However, Burnett and Hemmes agree if the record isn’t broken it will come close.
By the end of May, 54.02 million tonnes of western grain were shipped from country elevators to port terminals, up 16 per cent from the same period last year, Hemmes said.
Extrapolate that for the last two months of the crop year and it comes out to 62.6 million tonnes. But because grain movement fell 4.4 million tonnes, or eight per cent, in April compared to the three-year average, Hemmes guesses around eight million tonnes will move in June and July bringing the total closer to 62 million tonnes, or 3.4 million tonnes over the 2019-20 record.
Even if it’s just as little as 4.6 million, or about 460,000 tonnes a week, that’s enough for a tie.
Weekly grain deliveries by farmers to primary elevators had dropped to around 500,000 tonnes compared to 1.2 million or more earlier in the crop year, Hemmes said. However, 886,000 tonnes were delivered during shipping week 43 (May 24-30) the Canadian Grain Commission reported in its Grain Statistics Weekly. That was up slightly from 821,000 the week before.
The CGC reported as of week 43 western farmers had delivered 49.4 million tonnes of grain to primary elevators, up 24 per cent from the same period last year.
Exports of almost 45 million tonnes were up 25 per cent versus a year ago.
Reliable industry sources say grain companies expect strong movement in July.
Hemmes said now that much of the West has received rain and the fear of drought has diminished, farmers are more willing to sell grain.
The weekly grain monitor’s report said 15 grain ships had cleared the Port of Vancouver the previous week.
“That’s a lot of freaking grain,” Hemmes said. “They (grain companies) have ordered a lot of vessels. The vessel lineup is still pretty good. It’s not like it was four or five weeks ago but it’s still really strong. Thunder Bay is still going gangbusters. They are still ordering ships. They’ve got a strong lineup. I’ve got to think that those guys aren’t ordering up a ship if they don’t think they can get the grain.”
Most farmers have marketed all the grain they have or, at least all they want to sell this crop year, Burnett said.
Much of southern Manitoba received rain June 9 — after Burnett was interviewed. But he noted even with a good rain last week, in a week or two more will be needed given low soil moisture reserves, following four years of drier-than-normal conditions.
“From a grain handler’s position without the supplies in hand and drought conditions… I think the business is going to remain fairly subdued, especially with commercial inventories dropping by quite a bit.
Agriculture and Agri-Food Canada (AAFC) estimates all-wheat carry-over of 4.75 million tonnes. Burnett’s number is slightly lower at 4.7 million. The 10-year average is 6.6 million.
AAFC and Burnett put the canola carry-over at 700,000 tonnes. The 10-year average is 2.27 million.
Strong barley exports this crop year, mostly to China, are expected to cut carry-over to 500,000 tonnes, AAFC says, versus the 10-year average of 1.35 million,
“It will be the tightest barley situation we’ve probably encountered,” Burnett said.
“Whether it’s 500,000 or 600,000 tonnes it’s still very, very tight from a barley perspective.”
Despite tight supplies, grain companies are moving grain, Western Grain Elevator Association (WGEA) executive director Wade Sobkowich said in an interview June 1.
“It’s not as though we have run out of crop and we’re not going to move any more,” he said. “Companies still have sales programs… I talked to one who said they still have a very strong sales program and plan on sourcing enough grain… by offering the price to the farmer that’s going to motivate him to sell it.”
The WGEA, which represents Canada’s major grain companies, was pleased an above-average, and perhaps record volume of grain, will have moved in 2020-21, Sobkowich said.
“We had better-than-normal rail movement overall,” he said. “We had a mild winter. We had available capacity. We didn’t have any strikes. We didn’t have any lockouts. We didn’t have any blockades. We had minimal natural environmental disruptions. And we had strong sales so we moved a lot more crop in the fall and winter period than we do normally. It’s just a mathematical reality that we have less crop available to us now in the last few months of the crop year than we otherwise would have… ”
The railways credit months of record-setting grain movement to investments in more efficient grain cars and locomotives, as well as improvements made by grain companies in the country and port.
“If you listen to the railways they mostly say the better service and more capacity that grain received this year isn’t connected to a reduction in shipping in other sectors,” Sobkowich said. “If you believe that, then as shipping in other sectors continues to increase… then we should continue to see good service levels from the railways for grain and that’s our expectation.”