Canada Markets

Prairie Space Remains a Limiting Factor

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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This chart represents weekly deliveries of all grains into licensed primary elevators on the prairies, with the blue line representing the first 31 weeks of 2017/18 and the brown line representing 2016/17. While cumulative deliveries are close to 5% behind last year as of week 31, weekly deliveries in two of the past three weeks have fallen closer to 20% behind the same weeks last year. (DTN graphic by Cliff Jamieson)

Social media posts are pointing to growing concerns on the prairies linked to the failing rail movement of grain, as producers struggle to fill contracts and obtain the necessary cash flow to pay bills. November delivery contracts are reported to remain unfilled due to the lack of delivery opportunities in some locations, while the Daily Pipeline Status report from the AG Transport Coalition points to continued rationing or cancelling of cars by CN of 1,000 hopper cars in week 32, unchanged from the previous week, while further rationing is expected in week 33.

In weeks 30 and 31, stocks of all grains in licensed elevators were reported at levels that represented 91% of estimated working capacity, which points to an extremely tight space situation on the prairies, likely compounded at CN shipping points. CN's interim CEO reported to the Canadian Press on Wednesday on a number of measures planned, with expectations for a "slightly better March" while stating that there is still time to catch up. On Thursday, both railroads are expected to release a detailed plan to both federal Transport Minister Marc Garneau and Agriculture Minister Lawrence MacAulay.

As of week 31, cumulative producer deliveries of all grains into the licensed handling system totaled 27.955 million metric tons, down 4.8% from the previous crop year and just slightly below the three-year average. Relative to the 2016/17 crop year, cumulative producer deliveries are 8.8% higher in Manitoba, 6.9% lower in Saskatchewan, 8.7% lower in Alberta and 22.9% lower in British Columbia as of the latest data for week 31. On a volume basis, deliveries into Saskatchewan facilities are one million metric tons behind last year, while Alberta is next at 791,200 mt behind.

Looking at the attached graphic, weekly volumes delivered have lagged the same week in 2016/17 in 18 of the 31 shipping weeks, averaging 125,383 metric tons, or 11.2% below the same week in the previous crop year over those 18 weeks. Weekly deliveries of 791,500 mt in week 31 was the first time in six weeks that volumes delivered rose from the week prior, although this volume is 17.4% below the same week in 2016/17. In week 29, volumes delivered were 18.5% below the same week in 2016/17.

DTN 360 Poll

This week's poll points to the International Energy Agency forecasting that Canada's oil-by-rail movement will double from historical highs over the next two years, while asking if the agriculture industry should be concerned. You can weigh in with your thoughts on this poll, which is found, at the lower right of the DTN Canada Home Page.

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