MONTREAL — A grain transportation expert says alert farmers could reap the rewards of the open market coming Aug. 1.
“The effective producer and the guy who is watching the market signals, he’s going to make out (well),” said Mark Hemmes, president of Quorum Corp., Western Canada’s grain monitor.
He told delegates attending the Canadian Special Crops Association annual meeting in Montreal on June 25-28 that there is a near unanimous belief in the grain industry that the country elevator system will be far more efficient without the single desk.
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“The simple answer for this is if you’ve got fewer hands in the planning, execution and movement of grain, it’s going to make everybody work a little more efficiently,” he said.
The CWB made sure grain flowed to the Port of Vancouver at a manageable rate to minimize congestion at the port.
Under the open market, grain companies will be far less measured in their approach. They will be buying grain for what they need to load in two weeks and will pay a premium to get that grain when it’s needed.
“All of the sudden, you’re going to get $10 or $15 per tonne premiums on an export basis that they’re paying at the driveway because they need that grain to fill a boat,” Hemmes said in an interview following his presentation.
To take advantage of premiums, growers will have to monitor prices at local elevators and be ready to deliver when the grain is needed.
Hemmes said that is one of the many changes farmers will see in grain transportation over the next six to 18 months.
Another will be increased shipments through the West Coast. The CWB had a freight adjustment factor that helped subsidize the movement of grain partway to Montreal.
Grain companies will also be drawn by the ability to load larger vessels at the West Coast, lowering their cost per tonne on ocean freight.
“That leaves everybody with a lot of concern about what’s going to happen at the West Coast,” said Hemmes.
However, it should be good news for the underused Port of Prince Rupert.
“They may find themselves with more business than they know what to do with,” he said.
Hemmes said it could be chaos for the first while, but grain companies will sort it out in a hurry. They don’t want to have congestion at the port because that results in demurrage costs, he added.
The surge in traffic to the West Coast may cause some shippers of high-value crops to consider using an alternative port.
“In years where there is a significant carry in the market, we could see more and more stuff go through Thunder Bay.”
He said Thunder Bay has 140,000 tonnes of storage capacity, considering it handles far less grain than competing ports.
Another possible change will be more grain moving in containers. There was a 15 percent increase in the amount of container traffic in Australia immediately following its shift to an open market.
Hemmes said more companies will get into the wheat and barley business in Canada, including many pulse processors.
Specialty millers will be eyeing up the Canadian market, asking some of the new players in the wheat and barley business to fill 10 containers with product. The CWB didn’t devote much effort to courting that type of business.
That will be a double-edged sword for pulse processors. It could expand the amount of business they can do but it will mean more competition for the already elusive 20-foot containers they use to ship their pulses.
