Canada Markets

A reader recently questioned the sudden drop in prairie grain shipments to Thunder Bay. As seen on the attached chart, grain unloads at Thunder Bay reached a recent high of 239,700 metric tons in week 39, or the week ending May 3, but have since fallen sharply to 110,500 mt in week 43, or the week ending May 31, representing just 54% of previous four-week average.

The Port of Thunder Bay has been on a tear this year. The Thunder Bay Port Authority is reporting that more than 1.8 million metric tons has been shipped out of the port in the first five months of 2015, more than 28.6% greater than the five-year average for this point in time. This is reported to be the strongest start seen at the port since 1997.

Grain shipments through the St Lawrence Seaway (U.S. and Canadian) were up a combined 7% from last year in April and May, as indicated by the Chamber of Marine Commerce in a press release today, after 2014 movement saw the largest grain volume moved in 14 years.

The organization quoted Tim Heney, President and CEO of the Thunder Bay Port Authority, as saying "Grain continues to surge at the Port of Thunder Bay following the dramatic increase last year. Post-Canadian Wheat Board monopoly, the free market has turned out to be a good news story for our port with the major Canadian grain companies seeing the value of shipping more grain trough the Great Lakes-Seaway system and fully exploiting the grain terminal investments made over the last few years in Thunder Bay and other ports along the waterway."

Dow Jones reported today a surge in grain exports to Europe as partially responsible for the increase in eastern movement, with total grain exports to Europe reported at a 24% increase so far this crop year, with a doubling of durum shipments to Italy noted.

Meanwhile, West Coast movement is also growing (and competing for cars) due to the pull from Asian demand. Week 43 unloads were reported by the Canadian Grain Commission at 508,400 metric tons, 2.1% above the four-week moving average. While total unloads at western terminals (Pacific and Thunder Bay) are 15% higher than last year as of week 42 or the week ending May 24, West Coast volume unloaded is 10% higher than last year while 16% above the five-year average, as compared to Thunder Bay volumes which are 42% higher than last year and 33% higher than the five-year average, according to Quorum Corporation's Grain Monitoring Program data.

The vessel line-up on the West Coast continues to indicate solid demand for grain. The week 43 vessel lineup was reported to have fallen by two vessels to a total of 14 vessels in Vancouver, still above the historical average of eight to 12 vessels. The number of vessels in Prince Rupert increased by one, to a total of five vessels, with two to three vessels being the long-term average.

It's uncertain whether the recent lower trend in Thunder Bay unloads is an issue. Thunder Bay terminal stocks are reported at 417,100 mt as of week 43, just slightly below the 419,300 mt in store the same week last year. Demand for grains such as durum may slow over the coming months as buyers such as Italy turn to new-crop production from Europe, which will slow Thunder Bay throughput. Perhaps the current trend may simply be the expected outcome of a front-loaded program which has seen strong/early movement this crop year.

DTN 360 Poll

This week's poll asks what you think about recent reports suggesting that a new export grain terminal may be built on Canada's West Coast, the first in decades. We'd love to know what you think about this and encourage you to weigh in on your DTN Home Page, found on the lower right.

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

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