Barn boss a referee and coach - The Western Producer

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6 BY ED WHITE WINNIPEG BUREAU NOVEMBER 22, 2012 | WWW.PRODUCER.COM | THE WESTERN PRODUCER MARKETS MARKETS EDITOR: D’ARCE MCMILLAN | Ph: 306-665-3519 F: 306-934-2401 | E-MAIL: DARCE.MCMILLAN@PRODUCER.COM | TWITTER: @DARCEMCMILLAN SHIPPING | CAR UNLOADS WINNIPEG — Grain is rushing through the Canadian transportation network in the first months after the death of the CWB’s export monopoly. “Overall, things are looking pretty good,” said Mark Hemmes, manager of the federally appointed grain system monitor Quorum Corp., in a speech during the Fields on Wheels conference Nov. 6. That perception dominated the conference, which is the grain industry’s annual logistics forum. Not only has the system not broken down as a new set of logistical signals were switched on, but remarkable efficiency gains have been seen since Aug. 1. “For the first 13 weeks of this year, we have started to bust unloading paradigms, between both railroads in co-operation with grain companies, about capacity in Vancouver,” said Canadian Pacific Railway grain shipping manager Murray Hamilton. “Is this the new norm? Is that what’s going to be sustainable going forward?” Car unloading totals in Vancouver are at levels almost unimaginable 10 years ago, while shipping through Thunder Bay has hit nearrecord levels in recent weeks and the port of Churchill has seen good grain flow. The lack of significant problems in the grain transportation business is a pleasant surprise to many in the Canadian grain industry, considering that the CWB played a dominant role in many aspects of the grain logistics system, from organizing sales to ordering and organizing rail car allocation to directing grain to port terminals. Many players, such as grain companies, some farm groups and grain merchants, argued for years that the system could be more efficient without the CWB’s involvement because it added an extra layer of complexity to the system. However, many of the same players feared the switchover could reveal unforeseen gaps in the system or faulty structures as the new system evolved. Those problems have not materialized. “Is this all about the CWB? I’m not ready to say that yet,” said Hemmes. “But I can tell you that things are looking really good.” The industry had more than a year to prepare for the end of the monopoly, with federal agriculture minister Gerry Ritz making it clear as soon as the Conservative government won a majority that he intended to kill the board’s monopoly powers. Hemmes said he believes the railway companies didn’t want to be the cause of system problems so they knuckled down to ensure that didn’t happen. “The railways went into this crop year with a mindset that said nobody’s going to (be able to) blame us for this, so it’s working,” said Hemmes. Hamilton said the months before Aug. 1 were a harried time, with a feeling of “organized mayhem” within his company as it prepared for the new logistics signals. Weekly Vancouver grain car unloads of more than 4,500, well above the 4,000 per week average of the past five years, revealed extra capacity that has been hiding within the system. Hamilton said CPR’s new chief executive officer, Hunter Harrison, is pushing his grain people to find more. “He is absolutely convinced that there is more capacity out there,” said Hamilton. “Between railroads and grain SMOOTH SHIPPING The end of the CWB monopoly and replacement of its logistical influence have not led to significant transportation problems in the first 15 weeks of 2012-13 compared to the same period of other recent years. Grain is flowing well. All grain and wheat shipments to port (thousand tonnes) 4,500 4,000 all grain 3,500 wheat only 3,000 2,500 2,000 1,500 1,000 500 * 5-yr. avg. is 2007-08 to 2011-12 0 Vancouver Prince Rupert ThunderBay Churchill 5-yr. avg.* 2011-12 2012-13 5-yr. avg.* 2011-12 2012-13 Source: Canadian Grain Commission | WP GRAPHIC companies, I suspect we’re going to get to a brand new paradigm of efficiency in Vancouver.” Hemmes said many aspects of the new system are still new, and it’s too soon to tell how well they will do in the long run. However, the system has made 5-yr. avg.* www.secan.com Grain flow good in open market Vancouver has excellent fall | No major complications seen in early months following end of CWB monopoly Canadian Pacific Railway’s Murray Hamilton, left, and Mark Hemmes of Quorum Corp. share a laugh after discussing the happy times in the prairie grain transportation business. Producer cars are surviving, efficiency is increasing and everything looks good so far in the post-CWB monopoly era. | ED WHITE PHOTO 2011-12 2012-13 5-yr. avg.* 2011-12 2012-13 the transition remarkably well in the first three months since the ending of the CWB monopoly. Combined with last year’s good performance, it’s a reason to be optimistic. “Is this sustainable,” he said. “Well, let’s hope so.” CDC Meredith Lower Lower grain grain protein protein SHIPPING | PRODUCER CARS Producer car orders resilient BY ED WHITE WINNIPEG BUREAU Producer cars have shown surprising resilience in the post-CWB monopoly world. Producer car orders are pouring into the system after a slow start and service appears to be good, even though many thought there would be no place for them without a monopoly. “I thought the producer cars were going to disappear,” said Quorum Corp. manager Mark Hemmes at the Fields on Wheels conference Nov. 6. “We’re seeing a fair number of producer cars and they’re moving.” Hemmes’ surprise reflects that of many in the grain industry, who doubted that the railways would willingly provide producer cars or haul them once the CWB lost the power to confront the railways. Murray Hamilton, grain shipping manager with Canadian Pacific Railway, said the good service reflects the commitment his company made before the monopoly was broken Aug. 1. “From our perspective, it was going to be no change,” said Hamilton. If farmers ordered cars, they would be delivered. Hamilton said producer car orders fell 27 percent year-over-year in the first weeks of the post-monopoly period, but in recent weeks they have caught up to last year levels and in some weeks exceeded them. PRODUCER CAR ORDERS FELL 27 percent IN THE FIRST WEEKS POST- MONOPOLY BUT HAVE RECENTLY CAUGHT UP TO LAST YEAR’S LEVELS
DURUM | PRODUCTION OUTLOOK BY ROBIN BOOKER SASKATOON OFFICE Durum prices might strengthen in the new year, but the rally may come too late to hold acres as producers consider more profitable crops when making next year’s seeding decisions. Jim Peterson, marketing director for the North Dakota Wheat Commission, said 2012 world durum production was 1.3 billion bushels, down slightly from 2011 and down 200 million bu. from 2009’s record crop of 1.5 billion bu. Better spring weather helped North America increase production last summer. Canada’s crop rose to 161 million bu. from last year’s 153 million while the U.S. crop jumped 60 percent to 81 million bu. However, that was not enough to offset production problems in the European Union, Kazakhstan, Syria and Turkey. “It’s been about three years in a row that the world durum production has contracted, so that’s obviously a little bit bullish for prices,” Peterson said in an interview summarizing the presentation he gave at the wheat commission’s annual outlook meeting Nov.13 in Minot, N.D. “Stocks look to be tightening, but there is not a robust sales environ- BY SEAN PRATT SASKATOON NEWSROOM The enormous spread between green and yellow peas will narrow in the coming months as green prices fall and yellows rise, predicts a pulse analyst. The average delivered elevator price for green peas in Saskatchewan was $12.25 per bushel as of Nov. 19, compared to $8.47 per bu. for yellows. That works out to a spread of $3.78 per bu., largely due to a shortage of green pea production in Canada. Green and yellow peas were essentially parallel priced until November 2011, when it became clear Canada had harvested a disappointing crop. “That’s when greens initially started to inch away and then eventually started to run away from yellows,” said Harold Davis, author of prairiecropcharts.com. Stat Publishing said green pea prices are bolstered by a poor crop in Argentina, where growers are expected to harvest 170,000 tonnes of green peas, down from pre-harvest forecasts of 200,000 tonnes. There are concerns that only 30 percent of Argentina’s crop will be equivalent of a No. 2 grade in North America, with 41 percent destined for livestock feed or extremely price conscious markets. Davis thinks the rapid run-up in green prices could be coming to an end. “They’re in a fast bull market and that’s often the prelude to topping action,” he said. Larry Weber of Weber Commodities Ltd. agreed. He advises his subscribers to make certain their green peas are sold before Statistics Canada comes out with its first acreage estimate in April because growers will plant as much green pea seed as they can get their hands on. Davis is bullish on yellow peas because they are such good value. At one point in late September, the crop was selling for the same price as feed peas f.o.b. farm in Saskatchewan. “Since then, yellows have rebounded a little bit in prices whereas feed peas have gone sideways, so that spread has opened up a little bit,” he said. The spread has grown to 73 cents a bu., and Davis expects it to continue to widen as yellow peas snap out of their slumber. Buyers have been holding off on purchases because of a currency crisis, but Canadian pulse MARKETS THE WESTERN PRODUCER | WWW.PRODUCER.COM | NOVEMBER 22, 2012 Durum supply tight but price remains steady Demand slumping | North African imports decline after two good harvests Durum acres could fall in 2013 if a premium does not develop for the pasta-making wheat. | FILE PHOTO ment taking prices higher.” North Africa, which accounts for 50 percent of world durum imports, has reduced demand because it is coming off two good growing years with production hovering around 200 million bu., up from 160 million bu. in 2010, Peterson said. Frayne Olson, a crops economist and marketing specialist at North Dakota State University, told the meeting there is limited downward risk for durum prices, with the exception of two potential clouds: fiscal problems in Europe and the socalled fiscal cliff that the U.S. Congress needs to address by Jan.1. “Underlying supply conditions for all of our major commodities are very positive right now. The downside risk in prices is limited, with the exception of these two things that are really outside the realm of agriculture,” Olson said. “On a commodity standpoint, any hint of a recession or cutback on con- exporters say that situation is beginning to resolve itself. “I would expect yellows at some point to reawaken and head to higher ground,” he said. Feed pea prices have gained strength from the runup in corn and soy meal markets, a result of the devastating U.S. drought. However, feed peas haven’t come off their highs the way corn and soybeans have. Davis suspects feed pea prices will stay where they are for awhile, even if corn and soy meal prices rebound, because they didn’t cool off when the Chicago commodities did. sumer spending will put a negative tone into the commodity markets.” Peterson said durum acres in the United States and Canada will fall more than 10 percent next year if the current price relationship with hard spring wheat holds. “We’re already hearing of some early seed sales from guys that sell certified seed,” Peterson said. “There is pretty strong interest in spring wheat from typical durum growers.” Cash bids for durum and hard red spring wheat are about equal, at $8 to$8.25 per bu. in North Dakota and Montana. Olson said durum is below spring wheat in terms of per acre profitability, which is below corn or soybeans. “If you can raise a respectable crop of corn or soybeans, spring wheat runs a distant third and durum is below that,” Olson said. Many producers want a premium for growing durum rather than spring wheat because of the increased risk in meeting the tight quality specifications, Peterson said. “Most producers feel that with how small the U.S. durum crop was in 2011, and the potential trend for acres to be cut again next year in the U.S. and Canada, somewhere north of $10 a bushel is not too high, especially when you compare to corn at $5.50 and even winter wheat in the $8 to $9 range,” Peterson said. The U.S. durum industry sees the potential to lose durum acres next year but has been getting the durum it needs so is reluctant to press the Chuck Penner of LeftField Commodity Research said feed peas are more closely tied to feed wheat prices. “As long as feed wheat prices stay elevated, feed pea bids will remain firm and provide a floor for yellow edible prices,” he wrote in a recent edition of Alberta Pulse Growers’ Pulse Market Insight newsletter. Penner said some Canadian peas are being shipped to Spain, where they will be used in the livestock industry. He said the strong demand for feed peas is alleviating concerns about the potential for weaker pea 100% TAX DEDUCTION FOR 2012 If you are a high net worth Canadian resident wishing to reduce your taxable income through an investment in flow-through shares, please call Beringer today to find out more. After all, it’s not what you earn, it’s what you keep. WWW.BERINGERCAPITAL.CA 1-877-999-7780 WE’RE BUYING Feed Grains For Sales to Souris or Landmark, MB Call: 204-355-6239 7 market higher, he added. “They seem to be waiting right before planting time,” Peterson said. “If they feel they need more acres, they will step up and do more buying, but producers in the U.S. and Canada are locking in contracts and making seeding decisions certainly by the first of the year,” he said. “It’s difficult to pick up significant acres with a price run right at planting.” This year’s crop was generally high quality so there is little premium for protein. Olson said there is a big difference in how Canadian and American durum is marketed. Seventy-eight of the crop is used domestically in the U.S., while 85 percent of Canada’s crop is exported. “The U.S. is really a domestic driven market,” he said. “When millers and pasta companies start buying, that’s when we know there is some activity and their inventories are getting low. Some Canadian durum does come into the States, but lots of it goes to other parts of the world like Europe and North Africa.” Olson said Canadian producers will have to be aware of changing supply-demand conditions in the new open market. “Canadian farmers are going to recognize that price movements can be fairly quick up or down.” The durum market is small, he said, which leads to periods of volatility. Bids can suddenly increase when a buyer needs to assemble a ship load for an export order. PULSES | PRICE OUTLOOK Green pea price premium may flatten as yellows gain strength They’re in a fast bull market and that’s often the prelude to topping action. HAROLD DAVIS PULSE ANALYST demand from India. “This market environment suggests that Indian pea prices will not be setting direction this year as they normally do,” he wrote. “That’s a good thing since prices in India are looking kind of saggy right now.”
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Page 3 and 4: WEEDS | RESISTANCE BY ED WHITE WINN
Page 5: ICON GETS IMPROVEMENTS Jerry Schiel
Page 9 and 10: MARKET RALLY | DROUGHT MARKETS THE
Page 11 and 12: & OPEN FORUM B.T. CORN | GM VERSUS
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Page 15 and 16: CANADIAN WESTERN AGRIBITION | BISON
Page 17 and 18: THE WESTERN PRODUCER | WWW.PRODUCER
Page 19 and 20: ORGANIC CONFERENCE | TILLAGE BY KAR
Page 21 and 22: FARMLIVING FARM LIVING EDITOR: KARE
Page 23 and 24: ENTREPRENEURS | FARM SALVAGE FARM L
Page 25 and 26: I took my husband’s name Q: when
Page 27 and 28: BY BARBARA DUCKWORTH CALGARY BUREAU
Page 29 and 30: CANOLA | DISEASE BY BARB GLEN LETHB
Page 31 and 32: BRITISH COLUMBIA | LIEUTENANT GOVER
Page 33 and 34: BY ROSS FREAKE FREELANCE WRITER KEL
Page 35 and 36: RECYCLING | FARM WASTE BY WILLIAM D
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