“We’re going to need the farmers to deliver
during their busiest time – seeding.”
– Mark Thibeault
For once the stars have aligned in favour of farmers. Wheat exports from Canada are moving at a blistering pace while prices remain relatively strong.
Canadian Wheat Board (CWB) grain movement since October has been well above the five-and 10-year average and could be the biggest since 1999-2000.
The only potential fly in the ointment will be if farmers slow deliveries during spring seeding.
“With the projected large (export) programs unfortunately we’re going to need the farmers to deliver during their busiest time – seeding,” Mark Thibeault, the CWB’s senior manager of supply optimization, said in an interview March 20. “We’ve got the sales on the books so we have to find ways to encourage producers to find ways to deliver.”
The CWB especially needs No. 1 and 2 Canada Western Red Spring wheat and No. 1 Canada Western Amber durum, he said.
The prospect of perhaps not being able to deliver all the wheat they’d like later this crop year, with pool returns projected to be the second-highest ever, should be an incentive for farmers to deliver the wheat they’ve committed, Thibeault said.
The February Pool Return (PRO) for No. 1 CWRS, 12.5 per cent protein is $8.08 a bushel in-store. While that’s almost $2 a bushel lower than what farmers earned last crop year, it’s $2.75 a bushel more than the previous three-year average and second only to last year’s historic high.
If deliveries drop, ships won’t get filled on time, farmers will pay demurrage, and port terminals could plug . That would force the CWB to reduce the number of grain trains it sends, resulting in lost transportation capacity and perhaps lost sales. Then the CWB could be trying to sell more wheat in June and July when prices are pressured by wheat harvests in the United States and Europe.
Grain movement got off to a slow start in the 2008-09 crop year because of record low-carryover stocks, Thibeault said. But by September grain movement was average and above average every month since.
He credited three factors:
The biggest all-wheat crop (25.5 million tonnes) in the West since the 25.3 million tonnes harvested in 1999.
Lots of railway capacity. Other rail traffic from intermodal, to automobiles and lumber has declined due to the recession.
From October to February, the CWB cleared 7.7 million tonnes of wheat, durum and barley, up from the 10-year average of 6.8 million.
West Coast ports cleared 4.2 million tonnes of CWB grains compared to the 10-year average of 3.9 million.
Weekly car unloads of CWB grains at Vancouver have averaged around 3,800, well above the 2,500 seen normally.
Ironically, wheat exports from Australia, one of Canada’s main competitors, are bogged down due to slow trains, inefficient ports and recent deregulation of the wheat export monopoly. That country is struggling to market its 10-million-tonne wheat crop, up 4.4 million tonnes from the previous year when drought cut production.
Mike Chaseling, deputy chair of the Australian grain exporting firm, Emerald Group Australia Pty Ltd., told a recent outlook conference in Canberra that port facilities operated by CBH, another exporting company, were plugged because of a rush to ship grain soon after harvest, according to a story published by the Australian newspaper The Land.
Chaseling said CBH was working hard to fix the problems. Demurrage costs on delayed shipment to Iran were estimated to be $30,000 a day. [email protected]