Grain still faces shipping backlog
WINNIPEG — After Eric Fridfinnson’s record harvest a year ago, some grain was stuck on his Arborg, Man. farm for six months waiting for railcars. Even with a wheat crop a third smaller, he still has a three-month backlog to ship it south to the U.S.
“They just haven’t had the cars and we have to sit and wait,” Fridfinnson, who farms 8,000 acres of wheat, flax and oats about 125 kilometres north of Winnipeg, said. “It’s no different than any person waiting two months for their paycheque.”
Canadian grain sales to the U.S. and Mexico have plunged 35 per cent following a government order designed to relieve the backlog that piled up in 2014, according to the Ag Transport Coalition, which represents grain, oilseeds and pulse crop shippers. Canadian National Railway Co. and Canadian Pacific Railway Ltd. must move as much as 420,000 tonnes a week through at least March to avoid fines.
They’ve chosen to increase twoweek trips from the prairies to Vancouver or Thunder Bay, Ont., rather than month-long journeys to some U.S. destinations, Wade Sobkowich, executive director of the Western Grain Elevator Association in Winnipeg, said. The group represents companies including Richardson International and Cargill Ltd.
Western Canadian producers stand to lose more than $2 billion this year because of continued export delays, the Saskatchewan Wheat Development Commission said.
Prices for wheat at grain elevators are more than a dollar a bushel higher in North Dakota and Montana, John Duvenaud, the publisher of Wild Oats Grain Market Advisory in Winnipeg, said. “There’s a lot of wheat and other crops being moved, being trucked to North Dakota, Montana,” he said.
U.S. buyers are sourcing grain from other suppliers as Canadian companies are not confident they will get enough rail cars to deliver on southern rail corridors, Ralph Goodale, Liberal deputy leader, said. The shortage has the biggest impact on farmers in Saskatchewan who are “caught in the middle” and farthest from eastern and western delivery points, he said.
U.S. oat buyers stockpiled as much grain as they could before winter after millers struggled to get supplies from Canada last year, Dan Anderson, a commodities broker with ED&F Man Capital Markets in Chicago, said. While most imported oats still come from Canada, shipments from Finland have increased, he said.
Archer-Daniels-Midland Co. recently chose to ship flax to Minnesota from Kazakhstan instead of supplies from Canada, said Fridfinnson, who is also the chairman of the Manitoba Flax Growers Association.
“One of their solutions was to buy flax in Kazakhstan, have it railed north through Russia, brought by boat to the Southern U.S. and brought up the Mississippi by barge,” Fridfinnson said. “That appeared more reliable than bringing grain from Canada.”
Jackie Anderson, a spokeswoman for ADM, declined to comment.
Farmers harvested record wheat and canola crops in 2013 and a shortage of rail cars left as much as $20-billion worth of grain stuck on prairie farms last winter.
Railways have not filled 17,701 orders for grain cars since August, about 10 per cent of the total demand from shippers, Ag Transport Coalition said.
More than 8,200 rail car orders have been outstanding for four weeks or longer, according to the report.
Railroads say they are moving record amounts of grain. CN’s shipments are up 18 per cent from August to the end of January compared with the same period a year earlier, chief executive officer Claude Mongeau said. The railway’s cumulative grain tonnage has exceeded the government’s mandated volumes by 1.8 million tonnes since March, according to the statement.
There’s no need to renew mandatory grain minimums, Keith Creel, Canadian Pacific president and chief operating officer said. “No. 1, not needed,” Creel said. “No. 2, it didn’t make us move more grain. Number three, I don’t think the mandate’s going to be renewed after this crop year.”