Canada Markets

The rhetoric surrounding the movement of grain continues. Just days ago, CN Rail reported that the company is on a record-setting pace for Western Canadian grain shipments and have reached a volume which is 21% higher than the same period in 2013/14. CN's CEO, Claude Mongeau stated, "We are proud of CN's grain hauling achievements, setting new records basically every month over the last year. Our commitment to deliver service to Canadian grain growers is solid, and the result is a meaningful contribution to keep the end-to-end grain supply chain in sync in Western Canada."

At the same time, the Ag Transport Coalition reported that both railways combined have failed to spot 23,929 cars in the first 29 weeks of this crop year. While CN's record is reported to be far better than CP, both railroads combined delivered just 27% of the cars ordered for week 29 while CN has only supplied 56% of the cars ordered in the week they were ordered for this crop-year to-date, with 12,011 of the 23,929 cars a result of CN's failure to spot.

While there are fewer ships waiting off the West Coast than a year ago, the Western Producer reported 16 ships waiting to load grain at Vancouver and an additional nine ships waiting off Vancouver Island at the end of last week, with most expected to load grain. Ships waiting at the island are suggested to be a sign of concern, with the lack of grain needed to load the primary issue.

The attached graphic shows the decline in West Coast stocks of grain, as shown by the green bars. At 520,400 tonnes, week 31 stocks of all grain in Pacific ports are down from the week 28 high of 904,200 mt and the second lowest weekly stocks seen this crop year next to the 460,900 tonnes reported for week 9. Week 31 represents just 47% of the 1.1 million tonnes of capacity reported by the Canadian Grain Commission on the west coast.

Total wheat stocks in store west coast terminals in Vancouver and Prince Rupert are the lowest seen in 14 weeks at 257,700 tonnes, well below the 10-week average of 387,000 tonnes. Total canola stocks were reported at 60,600 tonnes which is a three-week low and below the 10-week average of 94,000 tonnes.

Also of concern is the downward trend in the in-transit stocks (blue line) which reached a weekly high of 869,200 tonnes in week 10 and has since drifted lower. Week 31 data shows western rail in-transit stocks of 468,200 tonnes (all grains), only the fifth week out of 31 where in-transit stocks fell below 500,000 tonnes, all of which happened in the previous 10 weeks.

With both wheat and canola exports already trailing the necessary cumulative volume needed to reach current export targets set by Agriculture and Agri-Food Canada (based on shipments from licensed elevators), a combination of waiting ships, tightening inventories along with falling in-transit stocks could make for a bad combination and could be compounded with transportation issues as we move into spring. Meanwhile, the federal government remains on the hot seat with minimum weekly volume requirements set to expire at the end of this month.

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

Follow Cliff Jamieson on Twitter @CliffJamieson

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