Growers eager to fill U.S. orders

After moving millions of bushels of wheat into the northern United States this winter, some grain brokers say they’ve discovered a great outlet for prairie crop.


“It’s definitely in our plans for the next year or two,” said Brian Voth, a marketing adviser with Agri-Trend Marketing in Altona, Man.


Brokers who have moved lots of product say there are tricks to successfully marketing into U.S. elevators, but they have seen nothing that suggests farmers and marketers won’t regularly use the U.S. system whenever price spreads grow or prairie grain movement stalls.


“It’s fairly basic,” said broker Doug Chambers of Quality Grain in 
Calgary.


Voth said his clients have moved more than 500,000 bushels of grain into the U.S. this winter, mainly milling wheat and canola. Chambers said his company has probably moved 1.25 million bushels of wheat into the northern U.S.


Voth said the U.S. premium over Canadian prices was sometimes $2 per bu., while Chambers said $1.25 per bu. wasn’t hard to find at times.


Both said they were able to find eager U.S. buyers and could have made more sales if they could have found ways to transport it.


“We could have moved 10 times as much if we could have found the truck power,” said Chambers.


Voth said some prairie truckers and trucking companies aren’t qualified to haul to U.S. destinations, which makes it hard to find people able to make the deliveries. 


Farmers need U.S. Department of Transportation approval and insurance coverage from a broker to get across the border. 


“It’s a bunch of paperwork, which is a deterrent to a lot of guys,” said Voth.


However, he said it doesn’t have to be a deterrent. Farmers have found they can negotiate the applications and meet the requirements.


Chambers said some truckers have tried to increase hauling rates when they realize farmers are making a nice premium by going to the U.S.


He said Quality Grain has mostly moved crop to one big U.S. buyer, which has arranged the trucks. As a result, movement hasn’t been a problem.


Farmers who want to haul to the U.S. by themselves must be careful about grain specifications.


“Do some research on it,” he said.


“The U.S. grain market is a different world.”


Protein levels are the prime consideration for most U.S. buyers. The basic public price assumes 14 percent protein, which is higher than the Canadian assumption of 13.5 percent. 


Voth said American buyers assess protein content in a way that tends to slightly boost the level of Canadian grain, so farmers shouldn’t assume the protein level they think they have will be the same in U.S. eyes.


However, Chambers warned that some U.S. assumptions can hammer elevator prices, such as the tiny allowance for dockage.


“My version of heavy dockage is five percent. Theirs is anything over .5 percent,” he said.


Dockage penalties can be significant and rise sharply, he added. Dockage at .5 percent cost a client three to four cents per bushel, but 1.5 percent cost 25 to 30 cents per bu. 


A sample of farmer grain tested in Canada was assessed at 2.8 percent dockage, causing the farmer to cancel plans to ship it to a U.S. buyer. 


However, Chambers forwarded a sample to the buyer, which assessed it as having only 1.1 percent dockage. 


The grain quickly became worthwhile to ship south.


“Without the sample, we would never have known that,” he said.


Farmers looking for a primer on this subject can check out Alberta Agriculture’s Exporting Grain, Oilseeds and Special Crops to the United States at www1.agric.gov.ab.ca/$Department/deptdocs.nsf/all/sis14334/$FILE/grain_exporting_handbook_jan2013.pdf.