Canada will need optimal grain movement in cutthroat market

It is a lucky thing for prairie farmers that competition for railway capacity in the coming crop year should be considerably less than it was in 2013-14.

With lots of moisture and a mild outlook for July, the prairie crop is headed toward high yields.

Too much moisture is the worry, and as this column was written July 11, much of Saskatchewan was getting heavy rain, with as much as 100 millimetres or more in central areas over two days.

Crops like lentils, which don’t like wet feet, were already struggling in some areas. The wet conditions promote disease and there is the potential for crops to drown in low spots.

But up to that point, the weekly provincial crop reports were talking about excellent production potential in many areas of the Prairies.

Understandably, farmers don’t like analysts talking about bumper crops before the harvest is in the bin, and events like this week’s heavy rain or an early frost could change the outcome.

Still, constant crop assessment and forecast is what markets do at this time of year.

The Western Grain Elevators Association, representing the companies that own most of the prairie grain handling system, at the end of June forecast the total prairie crop could range from 63.3 million to 74.1 million tonnes. The five-year average is 61 million tonnes and the record crop of 2013 was 76 million tonnes.

The WGEA said it issued the forecast to alert the railways to the potential big crop to avoid the costly grain movement foul-ups that turned what should have been a spectacularly profitable 2013-14 for farmers into a huge disappointment.

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Back then, the railways said they didn’t get notice of the potential bin buster early enough to gear up for the extra tonnage. Also, the railways blamed a colder than normal winter.

The rail system in the current crop year has performed reasonably well.

To the end of week 47 of the crop year, the railways had unloaded almost 350,000 cars at export terminals, up 0.5 percent over last year at the same point and up 11 percent over the five-year average, said the weekly grain monitoring program done by Quorum Corp.

The Canadian Grain Commission said that as of week 48, the total amount of grain exported was 37.5 million tonnes, up about one percent over last year at the same time. Domestic disappearance is 15.03 million tonnes, up 3.4 percent.

The railways were eager to handle grain this year as competition for cars was down because movement of oil, potash and other commodities lagged.

Canadian Pacific Railway chief executive officer Hunter Harrison responded to the WGEA numbers, saying his railway is eager and prepared to move the coming year’s crop and warned against finger pointing, noting that all components of the grain handling network must co-operate for optimum movement.

The railways have made track and siding improvements since 2013-14 and grain companies have made major improvements to their Vancouver terminals. But the railways have also laid off workers and the locomotive fleet is downsized because of overall less demand.

The federal government extended for another year the emergency rail grain shipment provisions brought in 2014.

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The grain and oilseed industry will need a finely tuned handling and transportation system this year because the international market will likely be in cutthroat competition mode.

Crops being harvested now or those growing now around the world are in generally good condition.

Quality and protein content are becoming issues in wheat, but the bushels are there and corn and soybean crops are developing nicely.

SovEcon on July 11 forecast that Russia would have a record crop.

Hotter than normal temperatures might threaten crops in the American Midwest later in the summer, but good soil moisture should lessen the impact.

It looks like buyers will have their pick of suppliers.

They won’t treat kindly any excuses from Canada about delivery problems.

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