Exports keep up the pace

Canada’s crop exports are clipping along at a similar pace as last year.

A total of 5.13 million tonnes of grains, oilseeds and pulses had been unloaded at ports through week eight of the 2018-19 crop year, which is almost identical to last year’s totals, according to Canada’s grain monitor.

Wade Sobkowich, executive director of the Western Grain Elevator Association, said performance has been good from both railways and he hopes that continues.

“We think this is going to be a high demand year due to concerns about production in other crop-producing countries,” he said.

“We think it’s going to sustain itself through the fall and winter.”

Agriculture Canada is forecasting 50.88 million tonnes of grain, oilseed and pulse exports for the year, up one percent from last year despite a 5.38 million tonne decline in production.

“Customers are looking for certainty of supply,” said Sobkowich.

“There is drought conditions and trade issues out there and they’re looking to secure supplies for their processing.”

It has also been helpful that the railways have informed the federal government how many rail cars they are planning to supply to the grain sector.

“Maybe that gives exporters a little more confidence in their sales programs,” he said.

Ken Ball, senior commodities futures adviser with PI Financial, wonders if canola exports are poised for a slowdown.

“It’s going to kill some demand if canola stays this relatively expensive,” he said.

There’s talk that China will purchase way more canola than usual this year because of its trade war with the United States, but Ball isn’t convinced.

“With canola priced as it is, they can still buy U.S. beans, pay the tariff and be better off with beans anyway,” he said.

Wheat has been flying out the door. Exports are 435,400 tonnes ahead of last year’s pace.

Ball said the commercials in North America like to push more wheat out of Canada early in the shipping season because it is cheaper than U.S. wheat and they make better margins.

“Year after year, U.S. exports are slow, their stockpiles build and that weighs down the North American price and they’re able to buy wheat at cheaper levels,” he said.

Another potential roadblock for Canada’s export program is all the grain that is left standing in the fields.

About 40 percent of the crop remained to be harvested in central Saskatchewan and half to two-thirds in the north as of Oct. 1, according to Saskatchewan Agriculture.

In Alberta, about 57 percent of the crop was left to be combined in the central portion of the province and approximately 80 percent was still standing in the north and the Peace regions as of Oct. 2, according to Alberta Agriculture.

Ball said there was a heavy canola crush program in August because growers thought it was going to be an early harvest, but now it is much tougher to pry the oilseed out of growers’ hands.

He worries that the brakes will be put on grain exports as well because of the amount of crop remaining unharvested.

“Getting good, clean, dry grain is going to be a bit of a challenge so the export pace may slow down,” said Ball.

Sobkowich is concerned for the growers with crop sitting in the field, but he is not worried about grain companies being unable to service customers later in the winter.

“By and large, I think, there’s plenty of grain on farm to give the grain elevator networks enough to handle for the foreseeable future until that crop is off,” he said.

Quality could be an issue with the crop remaining in the field that has been rained on and snowed on, but the early-harvested wheat and durum is in the top two grades and the canola is No. 1.

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