Canada Markets

If the old saying you have to make hay when the sun shines holds true, then seasonal trends with respect to grain exports might be a consideration when formulating a marketing plan and evaluating when demand tends to peak. In the case of canola, while crusher demand is restricted by capacity and somewhat predictable, it's the export side of the business that may provide insight as to when shipping tends to peak and when country buyers may be most aggressive in terms of sourcing this product. This becomes even more important to follow when one is located out of the draw area of a domestic crusher and is reliant on rail movement for product.

More than one industry participant has recently pointed out that this year's export program should peak early in the 2013. Just as we've seen last year, when farm inventories start tightening with grain in even tighter hands, the ability for exporters to source the volumes required for unit-train shipments becomes increasingly difficult and the possibility exists for them to slowly drop out of the game. Both elevator space and labor resources can be directed to chasing after grains that are more readily available.

The attached chart shows weekly export volumes by shipping week. The green line represents 2012/13 data up to week 13, which brings us to the close of business on Oct 28. The blue line shows weekly exports for the 2011/12 crop year, while the red line is the three-year average of 2009 to 2011 data.

2011 exports peaked in week 24 at weekly export shipments of 357,200 mt. Exports then climbed again three weeks later to reach weekly shipments of 351,600 mt. These two peaks would suggest a date of mid-January into the first week of February. From this date onward, the trend of weekly exports is clearly lower, with week 52 exports at 136,700 mt, or just 38.2% of peak shipments.

The three-year average indicates a different situation, with export shipments peaking in week 9 at 235,400 mt. Weeks 8,10 and 15 reached a similar level in the 230,000 mt range. The trend of weekly export shipping was then lower through the balance of the crop year.

As they say, feed the demand or it may go away. When the line companies begin to suggest they're gearing up for their last train of the year when it comes to canola shipping, which will be many months away, they just may be right.

With crop year now being 25% complete, additional observations from Week 13 CGC canola data:

-- YTD exports are 1% behind 2011, while 12.1% ahead of the three-year average.

-- YTD domestic use is 20.5% ahead of 2011 while 40.9% ahead of the three-year average.

-- YTD producer deliveries are 5.8% ahead of last year and 19% ahead of the three-year average.

-- Week 13 producer deliveries for the week picked up a bit from the previous week. Week 13 came in at 283,900 mt, versus 253,600 mt the previous week. This still represents 205,000 mt less than was delivered on the highest week of deliveries, which was week 6.

-- Week 13 visible stocks are 22.6% below this time last year, while 22.4% behind the three-year average.

Cliff Jamieson can be reached at cliff.jamieson@telventdtn.com

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