Wheat movement off the Prairies this fall could be disrupted by the large volume of feed barley sold by the private trade for shipment in October and November.
“It’s possible we could see some delays with wheat because of the amount of capacity that’s being used to move barley throughout this early period,” said Ward Weisensel, chief operating officer of the Canadian Wheat Board.
“It’s a situation that we’re quite concerned about.”
Some officials say spring wheat may not be called for delivery until
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November.
Throughout late spring and early summer, the private grain trade sold some 800,000 tonnes of feed barley in anticipation of an open market beginning Aug. 1.
Most of that was sold for shipment in October and November, when the demand for rail transportation is at its peak.
After the Federal Court shot down the government’s plans to bring an open market, the board was left with the task of figuring out how to move all that barley.
Weisensel said the board has been talking with the grain companies that made the sales about how best to handle the situation.
“We’ve had some good discussions about trying to move as much of that business around and out of that shipping window as we possibly can,” he said.
That could mean shifting some feed barley shipments up to September and pushing some further out to January.
“We haven’t solved all the issues yet, but we’re finding a path through this and we’re continuing to work on it,” Weisensel said.
The board is trying to manage the situation within the existing contractual arrangements between the grain companies and their customers, but ultimately, it is the companies’ responsibility to work things out with customers.
Attempts to reach officials with several grain companies for comment were unsuccessful. Another crucial factor in resolving the issue will be railway performance.
The railways have assured the board they will provide sufficient capacity to meet demand.
“We will be very, very dependent on the railways performing to the type of numbers they have been indicating,” said Weisensel. “Certainly we’ll hold them accountable to that.”
He added the board would never have allowed a situation like this to develop.
While it would have pursued feed barley sales, given the big crop and good demand, it would have kept the bigger picture in mind when negotiating contracts.
“I think it’s fair to say we wouldn’t have done it this way,” he said. “We would have been more cognizant of the capacity issue and what was available for all crops.”
A record winter wheat crop has to be moved in September and early October, and the board is also anxious to ship malting barley before the Australian crop comes off and the price drops.
Meanwhile, the board has lowered its projected 2007-08 sales program in light of a smaller-than-expected wheat crop.
At the beginning of the crop year the board set an export target of 15.8 million tonnes of wheat, durum and barley.
However, Statistics Canada’s latest report pegs western Canadian spring wheat production at 13.65 million tonnes, about one million tonnes less than its previous estimate.
Weisensel said while the marketing agency is still working through the numbers, the export target will be lower.
“Probably we’ll be down 500,000 tonnes across the board,” he said.
