From Fair to Bad to Worse

…….. this year grain markets are challenging for Canada

It was just a few months ago when grain market analysts were predicting that if all went well Canadian wheat would at least move to export markets at a fair price considering the global oversupply. The key to that hope was “move”. Since then rail deliveries to the west coast have dropped to around 50 per cent with over 35 ships at anchor awaiting loading berths. Some ships are even riding at anchor off the south coast of Vancouver Island. Needless to say, those ships are starting to pile up demurrage charges of up to $10,000 per day for each vessel.

But this is an old story that is starting to turn into an annual event. The excuses are all too familiar again – wet weather on the coast and freezing weather on the prairies causes delays in train logistics and ship loading. I would suggest both those weather problems are nothing new and have been with us for millennia – yet those that have some responsibility for grain shipping always seemed surprised when it happens. Naturally the perennial solution is another government/industry study to find out what the problem is and how it can be resolved. That endless research alone has created a thriving cottage industry with consultants and made whole careers for busfulls of civil servants. Blame will be directed at the usual culprits; producer groups will make their howls of outrage and politicians will threaten ever more onerous legislation to speed up movement. What we need is a study to study all the studies in the perhaps hopeless quest to find common sense somewhere to act upon. But that might put the grain transportation study industry out of business with hundreds of consultants laid off. But I digress.

What is really going to hurt this time around and certainly for many years to come is the emergence of Black Sea exports as a major player in the world grain trade. Those exports are sourced from the Ukraine, southern Russia, Kazakhstan and neighbouring areas. Students of history will recall those areas were the breadbasket of the world for hundreds of years until the arrival of communism, when export production basically stopped. With the return of a market economy to the area and the acquisition of modern technology both in production and logistics, wheat production and shipping has exploded. Total Black Sea exports have increased to 60 million tonnes, that’s almost 3 times Canadian export production of 22 million tonnes.

Twenty years ago that export production barely existed. Add into that Russian handling capacity has increased 9-fold compared to a mere 15 per cent improvement in Canada. Did I mention that the Black Sea is much closer to Middle East, European and North African markets than wheat from Canada. Turnaround time is so much quicker for ships in that area – compare that to grain ships waiting at anchor at Vancouver for weeks on end and then having to travel even more weeks to their delivery points. Canadian wheat has one advantage over Black Sea wheat – it’s the gold standard of quality and consistency and is used by some customers to upgrade cheap inferior wheat from the Black Sea area. But that won’t last long as Black Sea shippers increase incentives for better quality.

It gets worse, last summer saw a record Australian wheat crop which depressed export prices, then Black Sea wheat flooded the market last fall and this winter. That wheat sells for $50 to $70 cheaper than Canadian wheat and buyers can be assured that what they buy will actually be delivered in a timely manner. That’s what Canadian wheat sales people are up against. Black Sea wheat is also tentatively being listed on the futures market which makes it even more attractive to dealers and brokers. Reports also note that some Black Sea shippers are guaranteeing protein content of up to 11 per cent, its not near the gold standard but that’s never been done before.

All of that is ominous as increased production efficiency in the Black Sea is a certainty and will only aggravate the global wheat glut. It would seem the only respite are major weather calamities in that area. In the meantime, back in Canada we grapple forever it seems with the inability to get grains and oilseeds to market in a timely manner. You would think that after truckfulls of studies upon studies that some resolution could be arrived at but it seems not. Meanwhile Black Sea wheat exports continue to take over our old markets.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Red Deer’s Troubled Monk making hand sanitizers amid COVID-19

Breweries all over the world are taking initiative to develop hand sanitizer

A statement from Deputy Commissioner Curtis Zablocki, commanding officer of the Alberta RCMP

‘It is our hope that Albertans can see how very important it is to follow all health orders issued and will choose to do so willingly’

Red Deer County has three new confirmed COVID-19 cases

Government says Alberta up to 1,181 total cases

All playgrounds within the County of Stettler borders are temporarily closed

The move is in response to health and safety recommendations due to the COVID-19 pandemic

A Message From the Publisher – ‘We will do our best, but without local advertising revenue, The Stettler Independent cannot survive’

‘We will do our best, but without local advertising revenue, The Stettler Independent cannot survive’

Canada looking to disinfect used masks, Tam asks they not be thrown away

Best defence against COVID-19 is to stay home as much as possible, wash their hands frequently

Actress-activist Shirley Douglas, daughter of medicare’s Tommy Douglas, dies

‘Sadly she had been battling for her health for quite some time’

Boeing to continue production shutdown due to coronavirus

Company is extending its planned two-week shutdown

A message from Central Alberta Co-op

Please remember to practice social distancing at all our locations.

COVID-19 case reported at supermarket in Wetaskiwin

Sobeys will not release names to protect employees

Trudeau unveils details for emergency payment for Canadians

Applications for the Canada Emergency Response Benefit will be accepted starting Monday

Drake does the ‘Toosie Slide’ in new video, shows his mansion and empty T.O. streets

New creative outlet during the COVID-19 pandemic: The “Toosie Slide.”

Most Read