Statistics Canada's Railway carloadings, August 2018 shows crude oil movement by rail increasing for the fourth straight month to a record 19,923 railcars, up 60.5% from the same month in 2017. The National Energy Board reports this movement at a record 229,544 barrels per day, or a volume that is up 11% from the previous month and 91.4% higher than the month of August 2017. In the month of March, the International Energy Agency forecast Canada's crude-by rail movement to reach 250,000 bpd in 2018, while expected to reach 390,000 bpd in 2019 and even as high as 590,000 bpd depending on the actions of producers.
This data comes just one week after Alberta's Premier Rachel Notley released a proposal for the federal government to invest in both railcars and engines in order to increase oil-by-rail movement, given a lack of pipeline capacity facing producers. Lynn Jacobson, the president of the Alberta Federation of Agriculture, stated to the Calgary Herald, "If you're going to ship more of one commodity, then you're going to have to ship less of another. The railways are operating close to capacity now -- when they have to start prioritizing, in a lot of cases that hurts grain shipments."
At the same time, Mark Hemmes from Quorum Corporation, tasked with monitoring the flow of grain, suggested that a north-south flow of crude oil by rail would have a far lesser effect on grain movement than a movement west to the coast. The direction of flow will be the determining factor. He noted that the railways are also facing increasing demand for potash and coal movement.
The Ag Transport Coalition's Weekly Performance Update, as of week 12, showed total cumulative crop-year demand for hopper cars for grain shipping at 98,141 cars as of October 21, down just 6.5% from the same period in the previous crop year. This should be viewed as robust, because of the late harvest faced on the Prairies. Crop year-to-date, demand by shippers on CP track is down 3.3% from the same period in 2017-18, while demand by CN shippers is down 9.9% in the first 12 weeks.
As far as the timing of the delivery of cars wanted, both railroads combined delivered 90% of the cars ordered for loading in week 12 or the week ending Oct. 21 during the week wanted. CN supplied 93% of the cars wanted in week 12, while has exceeded last crop-year's performance in each of the past nine weeks. In week 12 of 2017-18, CN supplied just 51% of the cars requested for loading. In week 12, CP Rail spotted 87% of the cars requested for loading, while spotting 94% of the cars wanted in the same week of 2017-18 and have trailed last year's performance overall in 11 of the 12 weeks reported this crop year.
As of week 12, cumulative unfulfilled demand is reported at 3,535 hopper cars, of which 757 cars are reported as railway cancellations. This is down sharply from the 7,129 cars reported as unfulfilled demand this time last year, of which 3,437 cars were reported as railway cancellations, a number that would continue to grow.
DTN 360 Poll
This week's poll focuses on a number of issues pertaining to the agriculture industry that have been recently in the news. Which do you think will lead to the greatest challenge to the industry? You can weigh in with your thoughts on this poll, located on the lower right side of your DTN Homepage.
Cliff Jamieson can be reached at email@example.com
Follow him on Twitter @CliffJamieson
© Copyright 2018 DTN/The Progressive Farmer. All rights reserved.