Canada Markets

Western Canada's grain exports of the major grains as of week 10 or the week ending October 9 are reported by the Canadian Grain Commission at 6.714 million metric tons (licensed exports only) which are 9.6% behind the same period in the 2015/16 crop year.

The delayed harvest has stranded millions of tons of grain in the field that wait for favorable harvest weather. Millions of tons of grain will need to be dried prior to delivery. Significant volumes that may never reach export quality. Shippers have certainly bought time, given the crop that might have been, and what has transpired.

Prairie elevator space remains fair, with Oct. 9 stocks of all grains reported at 3.380 mmt, which is 48% of the prairie elevator storage capacity and 74% of the estimated prairie elevator working capacity (working capacity estimate by Quorum Corporation's Grain Monitor), both an improvement from the previous week.

In advance of the release of quarterly earnings results from Canada's two major railways, CP Rail has released a press release suggesting it is well-positioned to move the delayed grain crop to market. "We have the assets in place to move the crop to market, but given wet weather, snow and other factors, the vast majority of the crop is not yet ready to move," stated CP's CEO Hunter Harrison.

Data released by the AG Transport Coalition, an industry group representing 90% of the grain movement originating in Western Canada, seems to disagree with CP's take on things. As seen on the attached graphic, in six of the first nine shipping weeks since the crop year which began Aug. 1, CP has spotted between 75% and 77% of the hopper cars ordered for loading in the week requested. The average achieved over the nine weeks is 80% for CP, while CN has spotted an average of 94% of the hopper cars requested in the week wanted.

As a result, outstanding orders, or by definition, orders that shippers expect to have fulfilled by the railways that remain unfilled as of the report date, total 1,772 cars for CP and 262 cars for CN as of week 9.

Perhaps as a means to counter this data, CP will release its own weekly scorecard beginning Oct. 19 at cpr.ca/grain to report the railway's performance hauling grain for the previous week and will highlight "internal or external factors affecting grain movement."

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

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