It’s going to be challenging but not impossible to reach Agriculture Canada’s forecasts for canola and wheat exports, domestic use and ending stocks, as long as the railways can up their game in the second half of the crop year.
However, the news might not be so good for other crops.
Don’t get me wrong, meeting the export forecasts is not success. The department forecasts a burdensome three million tonnes of carryout for canola and 9.3 million tonnes for wheat.
We’ve run several stories recently about how problems in shipping the huge 2013 crop will result in price weakness lingering into the 2014-15 crop year and even into 2015-16.
However, is the deteriorating performance of the railways this winter making the ending stocks scenario worse?
Figures from the Canadian Grain Commission and Statistics Canada help put a little more meat on the bones of this story.
The commission has released grain handling and export statistics for Week 26, the halfway point of the crop year.
The numbers are not a complete picture of exports, and the commission is having trouble aligning data in its weekly reports with its monthly reports.
However, they give a good idea of what is going on.
The commission said 7.64 million tonnes of wheat have been exported in the first 26 weeks of the crop year to Feb. 2, which is 44.4 percent of Agriculture Canada’s full-year export target of 17.2 million.
Canola exports are 3.79 million tonnes, 46.2 percent of the full-year target of 8.2 million tonnes.
In each case, more than half of the total forecasted exports will have to move in the second half of the crop.
Actually, I thought the situation would be worse than that.
It is not unusual to move more than half of total annual exports in the second half of the year.
We’ll leave out 2012-13 because exceptionally tight stocks reduced exports in the final few months of the crop year, but let’s look at the previous four years.
More than 50 percent of wheat exports moved in the second half in 2011-12, 2010-11 and 2009-10 but not in 2008-09.
In canola, the second half was dominant in 2011-12 and 2009-10.
So the Agriculture Canada export forecasts are achievable for canola and wheat, if the rail and handling system show better co-ordination and we get lucky with the weather, such as no heavy spring snowstorms in the mountains and a normal spring road ban season.
The system has much worse results for special crops. Pea exports to the end of Week 26 are only 964,500 tonnes, which is 35 percent of Agriculture Canada’s forecast of 2.75 million.
Lentil exports stood at 176,400 tonnes, a dismal 11 percent of the forecast for full-year exports of 1.65 million tonnes.
As for domestic canola use, the Canadian Oilseed Processors Association says members crushed 3.5 million tonnes of canola to Feb. 5, which is 48.6 percent of Agriculture Canada’s full-year forecast of 7.2 million.
The 7.2 million tonne forecast could be met if the crush industry could run at 80 percent of capacity for the rest of the year, which is close to what it is already running at. Last year, the crushing industry ran at 88 percent of capacity.
I had feared that the situation was getting so bad that ending stocks of major crops might rise from the already terrible levels, but that is avoidable.
The same can’t be said for the major pulse crops.
Things might not be worse than expected for the major crops, but the status quo is not acceptable, either.
The situation is causing unprecedented discounts for Canadian grain relative to world prices.
It is vitally important to put co-ordinating resources in place so that railways can more efficiently meet grain companies’ movement targets. Railways also need more locomotives on the rails.
We need exceptional gain movement for the rest of the year to trim the carryover and support crop prices.
In this column I quoted Canadian Grain Commission export figures to the beginning of February for lentils that implied export movement was exceptionally poor.
I forgot that grain commission figures are for bulk shipments. Lentils move mostly in containers, and so I drew the wrong conclusion. The situation is similar for the pea numbers I quoted in the column.
The most up-to-date numbers for total lentil exports come from Statistics Canada’s Dec. 31 supply and disposition report.
That report shows lentil exports from Aug. 1 to Dec. 31 at 763,000 tonnes, up from 552,600 tonnes at the same point in the previous crop year. It is a record large movement for that period.
In peas, total movement from August to the end of December was 1.4 million tonnes, up from 1.09 million in the same period the previous year.
So my worries about overwhelming ending stocks in pulses were wrongly placed, at least based on the first five months of the crop year.