Canada Markets

USDA reports suggest that a Japanese tender for wheat for late February through March was awarded to the U.S. (91,200 metric tonnes) as well as Australia (88,100 mt). Suggestions were made in social media circles that Canada was overlooked for this business due to capacity constraints. Quorum Corporation, a third party charged with monitoring and reporting on railway performance, recently presented data which suggests that the Port of Vancouver capacity has been maximized through the month of June, while Prince Rupert's capacity has been maximized through the month of August.

Japan did buy volume from Canada in December, including a "surprise tender" for 162,011 mt, of which a lesser volume of 111,173 mt was agreed upon. In January, smaller volumes have been transacted, including an "irregular" tender of 49,935 mt. Commentary from the Japanese Ministry suggests that country aimed to position itself with Canadian supplies prior to the mounting issues of Canadian port congestion became an issue.

Japan was Canada's top wheat customer in 2012/13, taking 1.554 million metric tonnes, up 48% from the year prior. Since the 2008/09, Japan's share of Canadian wheat exports has grown each year, with that country being Canada's fourth largest customer in 2008/09, the third largest customer in 2009/10, the second largest in the next two crop years and No. 1 in the 2012/13 crop year.

The U.S. will undoubtedly be Canada's No. 1 market this year, with exports from licensed facilities totaling 937,600 mt as of the end of December, while USDA import forecasts indicate 1.77 mmt or 65 million bushels of hard red spring wheat will be imported this crop year.

Meanwhile, reports of September and October contracts that are yet to be delivered into the system continue to surface, while more than one company withdrew all bids, both old crop and new crop, until rail service has returned to acceptable levels.

Yesterday's Globe and Mail article "How CP engineered a smart turnaround" discussed how the highest paid CEO in Canada has achieved record profits for CP in 2013, with a further target of a 30% increase in 2014. Staff has been cut by 4,550, the locomotive fleet reduced by 400 and 11,000 cars have been removed from service. Meanwhile, oil by rail movement increased 68% in 2013 and is expected to double again by 2015.

Speaking at Edmonton's FarmTech Conference, Canadian astronaut Chris Hadfield, who grew up on a farm, said that being an astronaut is like being a farmer. It takes relentless, competent optimism.

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

(ES)

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