There’s a huge good news story coming out of 2020 for crop producers.
Or rather, three of them — demand is up, prices are good, and shipping is going like gangbusters.
“Total volumes are up about 23 per cent year over year,” said Brennan Turner, CEO of online grain-marketing company FarmLead. “We moved about 8.34 million tonnes of grain through Week 9 (of the 2020-21 crop year), compared to about 7.8 million tonnes a year ago. Volumes are up about a quarter.”
The pandemic slashed demand for rail shipments in many sectors but not in the grain business, so both CN and CP have been setting records for grain shipments.
“We are moving a lot of grain and can fill a lot of ships very quickly,” said Turner.
“We’re able to export that much more because we’re able to get to port,” added Alberta Canola chair John Guelly. “I don’t think we’ve lost a lot of orders because we haven’t been able to deliver.”
That’s night and day from last spring, when bad weather, rail blockades, and slides combined to create a huge backlog.
“When the blockades were on, there were like 50 ships waiting in Vancouver,” said Alberta Pulse chair Don Shepert. “When COVID-19 hit, we got down to 25. Product left the country and everything went smoothly for three to four months. It’s just incredible, really.”
And that’s despite sharply higher demand for many ag commodities, partly fuelled by countries beefing up their grain stocks, said Alberta Wheat chair Todd Hames.
“I think countries are purchasing wheat and other food products to make sure their country is secure during times of uncertainty” he said.
Presumably, the topping up of grain stocks will be short lived but that hasn’t happened yet, Hames added.
“I’ve been talking to my local elevator and we’re continuing to see a relatively brisk movement of grains.”
In fact, by Week 11 of the crop year, the year-over-year gain in exports was increasing, topping 10.8 million tonnes (versus less than 8.5 million a year earlier). Save for durum (which had a surge of sales in the last crop year), all of the major crops grown in Alberta are selling like hotcakes.
Wheat exports were up 31 per cent by Week 11 to just under 4.5 million tonnes while sales of oats were up more than 25 per cent. Barley exports were running at more than double last year’s pace “but that’s largely a function of more Canadian barley going to China because of the China-Australia barley trade rift they’ve got going on,” Turner said.
Some supply chain managers in other countries are overbuying because they are worried about having enough inventory if their country were to go into lockdown, he added. He’s also fielded phone calls from the U.S. and the United Kingdom from suppliers who wanted to ensure there will be steady supplies of durum for pasta and food-grade oats for oatmeal.
Supply concerns have been exacerbated by production problems elsewhere.
“For example, the United States Department of Agriculture is expecting EU wheat exports to drop by a third year over year and Ukraine is expected to drop about 17 per cent,” said Turner. “The bottom line is that the equivalent of about 17 million tonnes between those two countries would have to be made up elsewhere.”
Although the specific reasons vary by commodity, the storyline is much the same.
“When COVID-19 hit, all of a sudden, countries needed protein and wanted our product,” said Shepert. “Our potential went up quite a bit.”
But even though lentil prices shot up after the pandemic hit, demand hasn’t slackened, he said.
“Pulse exports have averaged 589,000 tonnes per month in 2020 versus 471,000 tonnes in 2019,” said Shepert. “China, India, Bangladesh, Turkey and the United Arab Emirates have been top buyers.
“COVID brought out a need for protein. The easiest proteins to get for food security are pulses and wheat.”
Demand for canola is also high, with even spot prices heading towards the $12-a-bushel mark. Even with China no longer the buyer it was, exports were well north of 2.5 million tonnes after Week 11 — 46 per cent ahead of the year-ago pace.
Barley prices are holding strong this year, with China, Japan and the United States buying a lot, said Alberta Barley chair Dave Bishop.
One of the big fears for growers was that the pandemic would depress beer sales (and eventually malt barley demand) because sporting events were cancelled and sales at bars and restaurants were down because of closures or restrictions.
But even with a large crop, malt barley demand has remained strong, said Bishop.
While many short-term factors have come together to produce this golden moment, there’s another long-standing one that counts, too, said Hames.
“I think Canada’s reputation for reliability, safety and quality product has been positive for us during COVID-19,” he said. “It’s good to see, I think we’re having an advantage in the marketplace. We’re shipping product out to countries that want to make sure they have the right product at the right time.”