Why grain deliveries dropped in Canada

Farmers say they’re feeling frustrated with the long winter dictating the conditions of grain sales and inventory storage. Allison Bamford reports.

Winter can feel long and drawn out for grain farmers like Rob Stone.

This time of year, he’s focused on planning out the next crop season, maintaining equipment, and hauling and selling grain to pay the bills.

Due to logistical reasons, and a lack of confidence in wheat prices, the Saskatchewan farmer got rid of most of his wheat in the fall, a little earlier than usual. He says that made for a slower December.

“We’re always used to having some difficulties in January and February with colder weather, so we like to move what we need to before that,” said Stone, who grows wheat, canola and lentils on his farm near Davidson, Sask., about an hour south of Saskatoon.

Recent data from Statistics Canada shows producers delivered less grain to elevators, feed mills, crushing plants and flour mills in December.

Deliveries of major grains across the country dropped 0.6 per cent year over year last month, according to the agency. Declines in wheat, oats and rye contributed to the lower totals.

Wheat deliveries, excluding durum, declined nearly 10 per cent, while deliveries of oats and rye saw the biggest drop, at about 16 per cent.

Saskatchewan accounted for more than half of all deliveries, at 56.9 per cent, followed by Alberta and Manitoba.

“Prices aren’t what you would want. In fact, they’re probably at or below a breakeven price, so that’s got to be holding some people back from deliveries,” said Stone, although he doesn’t think the slight drop in deliveries is much to worry about.

Cash flow, crop prices and storage usually dictate when Stone sells his grain.

Crop prices for almost everything have been down due to global trade disputes and overproduction.

Stone, who is also vice-chair of Saskatchewan Wheat, says stagnant canola exports brought on by China’s punishing tariffs likely pushed some farmers to sell their wheat early.

“The appetite to move wheat through the system has been strong,” he said. “There’s just not a lot of other things moving through the export system right now.”

Tariffs effectively cut off Canadian canola from the Chinese market. As a result, selling the oilseed to Canadian processors was one of the only options producers had.

Domestically, oilseed processors experienced a busier December, crushing 6.1 per cent more canola last month than a year earlier, and 2.1 per cent more than in November.

“Farmers didn’t have another viable alternative to sell (canola) into the grain handling system,” said Stuart Smyth, an agriculture and bioresources professor at the University of Saskatchewan.

Smyth believes that will change in the coming weeks and months as China is set to lower tariffs on Canadian canola in March.

Canada has already made deals with China to ship hundreds of thousands of tonnes of canola overseas.

“I think that China was significantly depleted in the amount of domestic supply on hand,” Smyth said.

As canola trade reopens and tariffs drop, Smyth says canola prices will likely rise, which could have a positive spillover effect on other commodity prices.

“It makes good economical sense for farmers to hold off and see if there’s going to be a price rally that may carry over from the tariff trade agreement with China,” he said.

Smyth suggests Saskatchewan may see more canola grown this coming season, if markets look promising.

Back on Stone’s farm, his crop rotation is largely set, with a mix of lentils, canola and cereals. He doesn’t like to stray too far from it.

“You try to be responsive, but we don’t knee jerk to market conditions, because you can knee jerk yourself right into the next issue,” Stone said.

Despite issues plaguing the agricultural landscape, Stone said “it feels like things are working well” at the farmgate level.