Prairie grain exporters appear to have escaped the credit crunch that crushed other export industries last fall and early winter.
While other industries are regrouping after a post-crash rout, crop sellers have had a good winter and hope it continues.
“Things are still going reasonably close to what I would call business as usual,” said Adrian Measner, chief executive officer of Mission Terminal, a grain company that exports out of Thunder Bay, Ont.
“There hasn’t been a change in the buying patterns from the people we’re dealing with, and also that we’re sourcing from.”
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Business as usual may not seem like a big deal in an ordinary year, but in the wake of the financial collapse of last September and October, most export trade was badly disrupted by the credit system seizure.
Thousands of previously busy ocean freighters suddenly became idle as buyers, sellers and shippers found they could not obtain letters of credit or other financial arrangements to guarantee transactions.
Ocean freight rates dropped as demand dried up and trade in many consumer goods nearly ceased.
However, world grain and oilseed trade escaped most of this disruption after only a few weeks of slowed sales and shipment. Trade was brisk over the winter, helping ease the world glut of wheat and coarse grains and ridding Western Canada of a big surplus of canola from last fall’s large harvest.
At the beginning of the credit crunch, analysts speculated that agricultural commodities would escape the strangling endured by other industries because people need to eat and will ensure they get food, even if they reduce purchases of discretionary items.
Credit restrictions have been steadily easing since the worst of the financial collapse last fall.
The London Interbank Offered Rate (Libor), the bank-to-bank lending rate, has fallen to levels not seen since last summer, before the financial collapse.
That rate, at 0.94 percent May 8, is used as the basis for much commercial lending further down the financial stream. Libor has fallen for eight consecutive weeks as global markets rallied and lifted much of the gloom about the world’s financial situation.
The TED Spread, which is used as a basis by most of the world’s grain trade, has also narrowed to 0.76 percent, making credit affordable to most sound exporters and importers.
Credit is still tight for some borrowers, but most commercial activities that were occurring before the crisis are happening again.
