Canada Markets

Last week's DTN 360 poll asked the question "Given the collapse in many Prairie cash grain markets, have you explored U.S. markets for your production?" Five percent of respondents replied that they had shipped grain to the U.S. by producer car, while a further 5% had moved product by truck to U.S. buyers.

The largest response, 44% of respondents, replied that they had yet to conduct cross-border business, although plan to explore opportunities in the U.S. in 2014. Eight percent replied that they do not have the comfort level in conducting business in the U.S., 4% indicated that they do not see opportunity in U.S. markets, while a further 34% indicated that they simply lived too far from the border to make this feasible.

Judging by reader feedback as well as conversations on producer chat sites, frustration grows over the growing delays in moving grain to port, with one grain company official suggesting the delay is as much as four to five weeks. Winter is never a good time to make up lost ground, with today's CN service update suggesting that the current record breaking low temperatures in areas of the Prairies, as low as minus 50 degrees Celsius with the wind-chill in Manitoba, has extended the winter operating plan which includes such measures as shortened train length and cold-weather detours. This latest period of very cold weather is suggested to last for seven days.

This next year will see some tough questions asked regarding the current system's ability to handle and move grain. Oil by rail movement has not helped, with Statistics Canada reporting a total of 62,908 cars shipped in 2009, 112,907 cars in 2012 and 132,791 cars shipped as of October 2013. This is a trend that will not go away and judging by the number and scale of loading facilities being built on the Prairies, will command a much greater level of service in the future.

With suggestions made that one of our largest companies may be off the market for certain commodities for months on end, perhaps even until new crop arrival, this issue will be at the forefront of discussions in 2014.

In another survey of the agriculture industry, the Canadian Federation of Independent Business released data from its December 2013 Business Barometer survey. The CFIB Business Barometer Agriculture Index came in at 56.1, the lowest level since June and below the index for all Canadian industries which was at 62.3. The index is a measure of expectations for the industry moving forward, with readings over 50 suggesting expectations for growth in the upcoming year as compared to readings below 50 which signal contraction within the industry.

When the CFIB survey asked what were the limitations on agriculture sales or production growth, 28% cited insufficient domestic demand, which was by far the largest response. The next largest response on a percentage basis was lacking management skills and time constraints at 21% and a lack of skilled labor at 20%. Thirteen percent responded with insufficient foreign demand, while only 9% responded with product distribution constraints.

On behalf of DTN, I would like to thank you for your responses to this survey as well as previous surveys. You can still weigh in on what you think will be the No. 1 challenge in Canadian agriculture in DTN's current 360 poll.

Here's wishing you and your family the very best of health and happiness in 2014, as well as success over any challenges you face!

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

(ES)

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