For grain handlers facing the traditional heavy post-harvest demand for space, increased production of ethanol wheat can be both a bane and a boon.
Just look at the more than 100,000 bushels of wheat piled on the ground adjacent to North West Terminal at Unity, Sask.
The huge piles reflect not only a good crop in the area this year, but also that more farmers in the area are growing high yielding, lower quality wheat for the ethanol market.
With yields 30 to 50 percent above traditional milling wheat, that translates into significantly more stocks than in the past.
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All that additional wheat could be a problem for grain handling companies.
But since that wheat isn’t a high quality product, there is a simple way to deal with the burgeoning inventory – pile it on the ground. If it gets weathered or goes out of condition, it can still be used for ethanol production or livestock feed.
Jason Skinner, chief executive officer of NWT, which will soon begin operating a 25-million-litres-a-year capacity ethanol plant alongside the 63,000 tonne capacity terminal, said most of the piled grain will go to the ethanol market.
“There is just so much wheat here because of those high yielding varieties that people will be moving it all over to find a home,” he said.
He added it’s not unusual for the company to store grain outside, having done so in three of the past five years.
He said the terminal elevator is full of Canadian Wheat Board wheat, canola, peas and barley, so there is no storage room for the lower quality non-board wheat.
“We have condominium space for farmers, so there’s enough storage for them, but we’re not buying additional stocks at this time,” he said last week.
Grain movement has been steady but slow in recent weeks, as buyers check out the quality and availability and exporters like the CWB assess the quality and quantity of the crop and search out customers.
Skinner said he expects NWT’s $42 million ethanol plant, which will consume an estimated 2.5 million bushels (68,000 tonnes) annually, will begin producing in January.
The structure is complete, with just some piping and installation work remaining. Commissioning of the plant will begin in late November and take about a month.
Skinner doesn’t think the economic crisis that has been buffeting North American and world financial markets in recent weeks will have any negative effect on the new ethanol facility.
As long as gasoline prices remain high, there will be a demand for ethanol.
He said the new plant will be almost completely free of fossil fuel. Grain screenings from the manufacturing process will be used in a boiler to produce thermal energy to power the plant, and gas created by the boiler can be used to dry grain when necessary.
