The surge in canola processing that’s been introduced for Saskatchewan over the final 4 months is anticipated to end result in a greater than 50 per cent enhance in Canada’s home canola crush capability, which might have main logistical and commerce move implications for crops grown on the Prairies.
A file 10.3 million tonnes of canola have been processed in Canada in 2020, in accordance with Statistics Canada. Over the previous few months since then, Cargill, Ceres International Ag, Richardson Worldwide, and Viterra have all introduced plans to construct new crops, or considerably increase present services, in Saskatchewan. Based mostly on the firms’ bulletins, Canada’s canola crush capability will develop by round 5.7 million tonnes by the finish of 2024.
“This is going to cause some major shifts in the industry, certainly for the Canadian industry. Canada exports half its canola, roughly, today. That’s going to go down to 10 to 20 per cent of its canola crop in the future,” stated Robert Day, president and CEO of Ceres International Ag, in a latest interview with RealAgriculture.
“This is going to have a dramatic effect on trade flows, the direction railroads go. They’re going to be moving more products and less seed,” Day stated. The corporate he leads operates the uniquely-located Northgate terminal alongside the Canada-U.S. border in southeast Saskatchewan.
Given the measurement of the new canola crush crops, particularly Viterra’s proposed 2.5 million tonne plant at Regina and Richardson’s growth to 2.2 million tonnes at Yorkton, firms are going to must originate canola by practice from elevators throughout the nation to maintain these services working effectively.
“We’ll start to see rail movement from the interior to another location in the interior to feed those plants. I think we’ll see a lot of changes that way,” famous Day.
However whereas work begins on new services that can maintain extra canola inland, the mud has hardly settled from an identical surge of new development at grain-handling services on the West Coast.
Cargill, G3, Paterson Grain, Parrish & Heimbecker, AGT Meals, and Viterra have all invested in new and elevated port capability in Vancouver over the final 5 years, and they are going to be hungry for crops to maneuver by means of these services. Not solely will they’ve room to maneuver extra crop, however barring a significant enhance in canola yields or acres, there’ll quickly be a major lower in canola seed exports by means of Vancouver as new crush crops swallow up extra provide.
To the east, in the meantime, the Port of Thunder Bay can be competing for crops grown on the Prairies, and the port is trying to construct on its efficiency final 12 months, which was its finest 12 months for grain motion in greater than 20 years.
Altogether, the backside line is there ought to be extra room for exports by means of the West Coast. Corporations that function port services in Vancouver will probably be trying for wheat, pulses, canola that’s not being processed domestically, and different crops grown in Western Canada to maximise their upgraded port capability, however some business insiders, together with Day, say they might not be shocked to see U.S. crops start to cross the border into Canada to be moved to Vancouver.
“I do think it opens up a significant amount of capacity on the Canadian West Coast, and one of the things we’re interested to see is to what extent we see new trade flows with products from different origins, such as the United States, replace some of the capacity and volume as we see it today,” stated Day.
There are numerous different elements, similar to U.S. freight charges, crop measurement, the guidelines for the Canadian authorities’s most income entitlement for CN and CP Rail, the politics of U.S. grain shifting north, and extra, that can affect how this situation performs out, however as Day defined, there’s an opportunity the main progress in canola processing on the Prairies will end result in American exporters trying to transfer their merchandise to abroad clients by means of Western Canada’s grain transportation system.