Rail backlog strands more grain on Prairies

The grain monitor says at least two million more tonnes of grain than usual are still stored on prairie farms because of the rail backlog.

Mark Hemmes, president of Quorum Corp., said the exact number is hard to pin down.

“We’re between two and 2.5 million tonnes more sitting on farms than what we would have expected and certainly more than last year,” he said April 13.

Based on a 2017 crop size of 71.9 million tonnes, plus a carry-in of 8.6 million tonnes, total supply was 80.5 million tonnes.

Of that, about 47.4 million tonnes had moved by the end of March, including grain used for domestic consumption as calculated by the Canadian Grain Commission.

That leaves about 33.1 million tonnes.

Wade Sobkowich, executive director of the Western Grain Elevator Association, said shipments are about 2.1 million tonnes lower than at this time last year and 1.9 million tonnes lower than 2016.

The Ag Transport Coalition in March pegged the rail car backlog at 28,000 cars.

“Miraculously, if you take 28,000 cars and multiply it by 90 tonnes a car, it comes out to about 2.5 million tonnes,” Hemmes said.

This backlog isn’t as bad as 2013-14 for a number of reasons, he said.

“Number one is (the railways) actually did move more grain through the crop year so far this year than they ever did in 2013-14,” he said.

“A lot of it had to do with the fact that in ’13-14 both railways started to fail very early in the crop year, and that made it a double whammy.”

This season, Canadian Pacific Railway was actually doing quite well until January, but Canadian National Railway was in trouble from the start.

“Secondly, the grain companies were a lot more careful about how things were going,” Hemmes said.

“With the ATC in place, the warning signals came on very early, unlike ’13-14. The grain companies actually reacted a lot sooner, a lot faster and a lot more efficiently in how they adjusted their sales programs.”

Sobkowich said grain companies have had to push out future sales and forego sales opportunities when cars didn’t arrive.

He said the most important measurement to shippers is how well the grain moves in accordance with week-to-week demand.

“If you wait long enough, the railways will move the crop, so that’s not a very good way of looking at it,” he said of railway claims that they are moving as much or more on average as in previous years.

“You have to look at each week independently.”

The ATC reported in Week 36 that CN supplied 83 percent of cars ordered while CP supplied only 53 percent.

Hemmes said farmers are frustrated and getting nervous.

“Yards are turning into sloughs. Anything that’s in a bag in a field, that ain’t moving until June. It’s only the grain in bins and yards that’s going to move over the next eight weeks.”

He predicts a higher carryout of 11 million tonnes or more this crop year. Carryout typically was six to seven million tonnes until five years ago, but is now averaging around eight million tonnes.

Hemmes said even if the railways begin to perform like they did in 2014 and the carryout drops, it will still be too high.

“That’s a lot of money to leave on the table,” he said.

He added the late spring and what will most definitely be delayed seeding could lead producers to hedge and keep some of their grain because of possible production issues this year.

“It’s a crapshoot,” he said.

Meanwhile, the House of Commons is back from a two-week Easter break. The amended Bill C-49, the transportation legislation many are looking to be in place for the next crop year beginning Aug. 1, was not yet on the order paper.

A motion to consider Senate amendments requires 24 hours of written notice. The House could agree with the Senate, reject those amendments or make its own amendments. It could also agree with some amendments and not others.

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