American oat millers could shut down this spring if rail cars aren’t available to ship western Canadian oats south, says Randy Strychar, an industry analyst.
Oat stockpiles at millers in the U.S. Midwest have reached dangerously low levels and if rail cars aren’t available in Canada there is no easy way of maintaining those stocks.
“There is less 20 days of oat grind … 4.8 million bushels of oats sitting right now at commercial facilities (in the U.S.),” said Strychar, an oat analyst and grain trader based in Vancouver. He spoke Feb. 24 at GrainWorld, an industry conference in Winnipeg.
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“If we can’t get rail cars down to them they’re going to run out of oats…. We are very, very close to running these mills out of oats.”
Prior to Strychar’s presentation, agriculture minister Gerry Ritz met with representatives of Canadian National Railway and Canadian Pacific Railway in Winnipeg.
During a press conference at GrainWorld, Ritz said the railways are adding thousands of more cars to alleviate the grain transportation logjam in Western Canada.
However, Ritz said the railways intend to use the additional capacity to move grain to Vancouver and Prince Rupert.
“They’ve told the grain companies that they’re not going to entertain anything, in the next short time, that goes to the U.S. or Thunder Bay.”
Strychar said the announcement was “vague” and not helpful for the oat industry, which is desperate for rail cars.
“I know there are problems, I know they’re working on solutions, but the oat industry can’t wait for them.”
He said U.S. millers grind approximately 120,000 tonnes, or 8.75 million bushels, of oats every month.
Assuming they have reserves of approximately five million bu. and another five million bu. of oats on the books that are scheduled for transport, Strychar said the millers could use up oat supplies by April.
One possible solution for the millers is importing oats from Sweden or Finland, which could cost significantly more than Canadian oats.
Shawna Mathieson of the Prairie Oat Growers Association said Strychar’s warnings of a shutdown are legitimate.
“I have heard those comments from a few millers,” she said. “They are running drastically short on oats…. If the situation is not remedied, there is that potential.”
If the railways aren’t going to provide additional cars for U.S. shipments, Mathieson said trucking is the only option, for now, to get Canadian oats to the mills.
She said oats are being transported by truck but it’s not efficient because the U.S. doesn’t permit Super Bs, or two trailers connected together, on their roadways.
Real Tetrault, president and chief executive officer of Emerson Milling, an oat miller in southern Manitoba, said Super Bs haul 3,000 bu. per shipment.
“Going to the U.S., you can only send a tandem load of oats. You’re sending 1,400 bushels at a time … so it’s much more expensive to send product into the U.S.”
Mathieson said the Feb. 24 announcement, that railways are focused on shipping grain to Vancouver and Prince Rupert, could exacerbate a critical situation.
“The outlook at this point doesn’t seem positive. We would hope that (it) gets remedied shortly once the situation becomes even more critical … for Canadian oat growers and also the mills.”
The North American Millers Association was called for comment on this story, but the organization has not responded yet.
