DTN analysts in the U.S. are noting the expected challenges of harvesting a record United States crop, with grain piling up on farms and in elevators while unloading hours and opportunities are being limited due to the heavy front-end supplies as harvest nears an end. Basis levels across most grains are also weaker than their respective five-year averages.
As Canadian Prairies producers struggle to harvest the balance of what could be the second-largest crop ever given, challenging weather conditions and ahead of what is expected to be a cold winter, the rhetoric between the country's two major railways and shippers may be heating up.
While both of Canada's railways claim they are well-positioned to meet demand, industry opinions beg to differ. The Manitoba Co-operator reported Wade Sobkowich of the Western Grain Elevators Association stating "The numbers do speak for themselves. CP came out with a news release that talked about the drawn-out harvest and implied that there is not enough grain to move right now. My response to that is that CP should worry about moving the grain that is already in the elevator before it worries about moving the grain that is still in the field."
The same piece shows Keith Creel of CN stating "Maybe Wade (Sobkowich of the WGEA) could let me know how to better understand what they were doing to fill the grain bins in the first of seven weeks of the year because certainly we have no grain to move in the rail cars. It's a missed opportunity for everyone."
As seen on the attached chart, primary elevator stocks as of week 12, or the week ending Oct. 23, were reported at 3.457 million metric tons, the second-highest stocks seen since the crop year began Aug. 1. This volume is 5.9% higher than the same week in the 2015/16 crop year and 16.2% higher than the five-year average for this week.
Weekly shipments for this same week were reported at 894,900 metric tons, a six-week low and 8% below the average of the previous four weeks. This weekly shipped volume has declined for three consecutive weeks since a volume of 1.023 mmt was shipped in week 9.
Week 11 data supplied by the AG Transport Coalition, which covers 90% of the grain shipped from Western Canada, shows CN meeting 88% of the week 11 demand, its lowest performance seen in the first 11 weeks of this crop year, while CP met 85% of its weekly demand which was the company's best weekly performance in seven weeks. Cumulative unfulfilled shipper demand (outstanding orders, rejected cars, railway cancellations and shortened supply) totals 1,877 cars for CN Rail and 1,767 cars for CP Rail, as of week 11.
DTN 360 Poll
This week's poll asks, given the costs and benefits of storing grain, what crop do you think will give the best financial return by storing it in the 2016/17 crop year? Please feel free to share your thoughts, with the poll found at the lower-right side of your DTN Home Page.
Cliff Jamieson can be reached at email@example.com
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