Grain backlog becomes worry

Grain deliveries are well behind last year’s pace and that could create a backlog next spring, says a grain industry executive.

A late crop combined with poor harvest conditions is leading to a dearth of grain trucks at local elevators.

Producer deliveries are 650,000 tonnes behind last year’s pace, according to Canadian Grain Commission statistics.

Wade Sobkowich, executive director of the Western Grain Elevator Association, said the vast majority of growers were still in the midst of harvest as of the end of September.

“We’re trying to do what we can to make sure that we’re not bothering them to deliver grain or otherwise distracting them from what ought to be their direct and most important focus right now,” he said.

Surprisingly, grain exports are nearly 400,000 tonnes ahead of last year at this time. That is because elevators have been transporting carryout from last year’s harvest to their export terminals.

Sobkowich said there was about 8.4 million tonnes of carryout dominated by trade-challenged commodities such as canola, durum, peas and lentils.

Wheat and barley stocks are the lowest he has seen in 20 years with two million tonnes of wheat and 700,000 tonnes of barley.

Sobkowich said there is plenty of available rail capacity so grain companies are moving as much product as possible but that is a challenge due to the lack of new deliveries.

“We would like to be moving more but how can we move what’s not available to us?” he said.

“We need to respect the fact that prices are somewhat depressed and producers are not focused on delivering into the system.”

Grain stocks are getting low but some new crop is trickling into the system, so grain companies are not in danger of completely running out of supplies.

The problem is there is a limited window of time where grain companies will have sufficient rail capacity to move large volumes of the 2019-20 crop.

Canadian Pacific Railway plans to supply 5,700 cars per week until the cold weather hits and then drop to 4,250. Canadian National Railway’s plan is for 5,650 before the cold weather and 4,150 cars per week afterward.

The temperature threshold for the railways is -25 C before they start curtailing supplies.

Sobkowich thinks the late crop and the cold weather railway limits will push this year’s shipping program down the track a ways.

“I think it’s safe to say that more of this crop will be exported after winter is over in the early spring than what we have historically seen,” he said.

“(Railways) were expecting to be moving more right now and obviously we can’t move what’s still in the field.”

The other challenge with this year’s crop is the rapidly deteriorating quality caused by excessive September rainfall. There will be plenty of sprouting, mildew and frost damage.

“Now that we’re going to have quality issues throughout the Prairies we’re going to have to try and be more precise with rail movement so that we can properly blend to meet customer specifications,” said Sobkowich.

It may mean grain companies are going to have to expand their traditional catchment areas and will have to do more blending to meet those specifications.

“It’s challenging for farmers right now. It’s going to be challenging for handlers once that grain gets into the system,” he said.

About the author

Markets at a glance

Copyright © 2019. All market data is provided by Barchart Market Data Solutions. Information is provided 'as is' and solely for informational purposes, not for trading purposes or advice. To see all exchange delays and terms of use, please see disclaimer.

explore

Stories from our other publications