Canada Markets

Just one day prior to the release of the Statistics Canada production report on Dec. 4, the Canadian Grain Commission released a statement reinforcing the notion that grain exports for wheat and canola were ahead of last year and ahead of the five-year average. This should be little consolation to producers who are facing a clogged handling system and may be forced to wait months for delivery opportunities.

It seems amusing that this statement was made prior to the release of a government report which substantially boosted Canadian production for this crop year. Perhaps the numbers looked better when considering a smaller crop, or perhaps this was made to bolster the claim by our Federal Agriculture Minister that rail shipping was "adequate"? Regardless, I struggle to confirm the data released in the statement.

While I agree with the statement that suggested that wheat exports as of week 16 (Nov. 24) totaled 5.1 mmt and 31% ahead of the five-year average shipments as of this date, this should be viewed as unsatisfactory given the fact that the crop size is 43% higher than the five-year average.

It's the canola data released that I struggle with. Canola exports as of week 16 were reported in the statement to be 2.3 mmt, 28% above the five year average of 1.8 mmt. A quick check of year-to-date canola exports as of week 16 on the CGC site indicates exports ranged from a low of 2.098 mmt to a high of 2.672 mmt in the 2008 to 2012 period, averaging 2.369 mmt and not 1.8 mmt as suggested. Given this scenario, year-to-date shipments are actually 2% below the five-year average, not 28% higher. When one considers the fact that Wednesday's Statistics Canada report boosted canola production by 2 mmt to 17.96 mmt, the 2013 crop is forecast to be 34.4% higher than the five-year average which places us even further behind the eight ball.

In a letter to the Saskatoon Star Phoenix, Gerrid Gust, chair of the Western Canadian Wheat Growers Association, places the blame squarely on the railways due to lack of capacity. Grain is forced to compete with higher volume movement of other commodities such as potash and oil and is losing the battle. Gust calls for "more penalties and greater accountability for poor railway service," as well as incentives to add capacity in the heavy fall shipping period. Pipeline construction for badly needed oil movement will also lead to reduced need for rail movement and will free up capacity for other commodities such as grain.

Producers are clearly answering the call to increase production to meet the ever-growing global population as well the dietary needs of the growing middle class population seen in Asian countries. It's just too bad that our supply-chain partners were not on the same page.

Week 17 exports reported Friday indicate year-to-date wheat exports at 5.502 mmt, while week 17 canola exports are reported at 2.546 mmt.

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

(ES)

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