Grain Monitoring Update CY; YTD. ITAC, Saskatoon November 6, 2013

Transcription

1 Grain Monitoring Update CY; YTD ITAC, Saskatoon November 6, 2013

2 Overview 2 GHTS Performance CY This crop year Market change Logistics Port Terminals Traffic Flows 2013 Production What s to watch

3 Production (Tonnes) 70, , , , , , , Cereals Canola Special Crops Other Linear (Total)

4 Production 32 Years (% Proportion) Cereals have dropped from approx 83% to under 60% Canola and Special crops have filled the gap Driven by industries desire for diversification 100% 90% 80% 70% 60% 50% 40% Provides Canada with a greater ability to weather commodity specific market fluctuations 30% 20% 10% 0% Cereals Canola Special Crops Other

5 Time in the System Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q Country Elevator Storage Time (days) Railway Loaded Transit Time (days) Terminal Elevator Storage Time (days) Total (days) Linear (Total (days))

6 GMP Dashboard Q3 YTD Year/Year Change Total Time in System: % Loaded Transit Time: % Time In Store Country: % Time in Store Terminal: % Vessel Time in Port: % Elevator Turnover Ratio: Country: % Terminal: n/a Total Car Cycle: %

7 The GHTS in the Crop Year Production, traffic and movement Higher than normal production and record setting movement volume Good quality crop with good prices With the exception of rail strike period, good overall performance of the whole of the system (average of 47.1 days in the system) Significant Events Preparation for the removal of the CWB single desk Acquisition of Viterra by Glencore CP Rail strike

8 Vancouver to wk 52, , ,000 5 Yr Mean 4, , ,000 3, ,000 4 per. Mov. Avg. (5 Yr Mean) 4 per. Mov. Avg. ( ) 3, ,000 2,500 2, ,000 1, ,000 1, , Unloads (Cars) Shipments (Tonnes)

9 Vancouver Vessels August September October November December January February March April May June July Waiting Loading Number of Vessels Cleared 0

10 Railway Loaded Transit Days in Transit Coefficient of Variation Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q Loaded Transit Time (days) Coefficient of Variation 13 per. Mov. Avg. (Loaded Transit Time (days)) 13 per. Mov. Avg. (Coefficient of Variation) 0.200

11 Prince Rupert to wk 52, , ,000 5 Yr Mean 1, ,400 1, ,000 4 per. Mov. Avg. (5 Yr Mean) 1, , , , Unloads (Cars) Shipments (Tonnes)

12 Prince Rupert Vessels August September October November December January February March April May June July Waiting Loading Number of Vessels Cleared 0

13 Country Elevator Performance to Oct 26, 2013 Deliveries at country elevators increased by 6.1% over last year in the same period, Shipments remained relatively the same showing a decline of 0.5%. Wheat deliveries up 20%, Shipments up 16% - increased production accounting for majority of improvement Canola deliveries down 8% and shipments down 16%. Last year experienced a unusually early and strong sales program. Deliveries 10, , , , , Shipments 10, , , , ,

14 Railway Planned Car Allocation (Week 13, CY) 15,000 10,000 5,000 - (5,000) (10,000) Total Total SF SF (15,000) (20,000) (25,000)

15 Port Unloads YTD (Oct 26, 2013) 2,000,000 Overall unload volume is down over last 4.2%, the majority at Thunder Bay. Vancouver volumes started much slower due to the later harvest and have recovered since Prince Rupert volumes have increased a greater amount due to the focus and aggressive marketing of PRG. West Coast Thunder Bay Churchill 1,800,000 1,600,000 1,400,000 1,200,000 1,000, , , , , , , , , , ,000 0 Aug Sept Oct ( to Oct 26)

16 Port Shipments YTD (Oct 26, 2013) Overall vessel loading decreased 14% from last year. Thunder Bay volumes are down the most followed by Vancouver and Prince Rupert. Churchill has shown a marked improvement and is trending to reach its 500,000 tonne target. West Coast Thunder Bay Churchill 2,000,000 1,800,000 1,600,000 1,400,000 1,200,000 1,000, , , , , , , , , , ,000 0 Aug Sept Oct ( to Oct 26)

17 Vessel Lineups (to week 13) Vessel lineups grew rapidly once new crop was available. Reports from terminals at Vancouver would indicate that rail pipeline coordination of product to vessel is sub-optimal creating problems in terminal operations and extending loading times and increasing vessel wait times. Vancouver Prince Rupert Waiting 10 Berthed/Loading * Note: Reflects the vessels waiting and loading on the Friday of each week, except week 14 which shows the Monday Waiting 4 Berthed/Loading *

18 West Coast Volumes Last four years averaged 21.3 MMT up 58% from the average 12 years ago and about 30% the 25 year average Is this the new normal? 25, , , , , Prelimina How much can it grow? VANCOUVER PRINCE RUPERT Total West Coast

19 West Coast Drivers Changing Global Demand: Depleted global reserves, increased demand for protein in Asia Pacific markets and short supply from drought effected regions Agronomic: Increased yield from improved cropping practices and higher yielding crop varieties, increased application of inputs and crop diversification Price: The incentive for producers to increase spending on inputs and reduce summer fallow was driven by near record global prices Logistical Economics: Spreads on ocean and rail freight are significant drivers on the routing choice for sellers of Canadian grain, making West Coast routing a preference.

20 Ocean Freight Spreads West vs. East Coasts E Med Hong Kong India Indonesia (5.00) (10.00) (15.00) $5,000 $7,500 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000 $50,000 $55,000 Japan Korea Med/ North Africa N Europe Comparative Vancouver Montreal spreads based on equalized ocean freight (includes lake freight from T Bay on Montreal) Japan E Med India Med/ North Africa Vancouver Montreal N Europe Est price/ tonne with $7,500 PD and Montreal at $15,000 (Panamax Mid Sept 2013)

21 GHTS Performance YTD Summary Significant challenges with rail service CP from November to March CN from mid January to March Severe winter conditions/ heavy snow fall on prairies Management and process approach changes at CP Significant increases in vessel numbers and wait times on West Coast Low ocean freight driving some utilization approaches Impact of CWB changes loss of consolidation/ coordination Impact on anchorage space, particularly in Vancouver

22 Elimination of the CWB Single Desk Structural Changes Glencore/ Richardson Foothold by some major international players little action or cap investment yet though Crop diversification Trade Flows Higher volumes through west coast driven by economics and logistics arbitrage Competition between companies for market share Missing the opportunities for consolidation? Other Concerns: Railways focus and market control Grain company market concentration

23 CWB Change: Port Terminal Issues US?

24 Grain Terminals: BC and PNW PNW terminal capacity has not been a viable alternative in the past 11 terminals (and growing) with new access provisions may change that in the future

25 PNW Grain Terminals Prince Rupert 1 facili0es.209 MMT Storage Tacoma 1 facili0es.088 MMT Storage Aberdeen 1 facility.104 MMT Storage Kalama 3 facili0es.290 MMT Storage Portland 3 facili0es.195 MMT Storage Vancouver (BC) 6 facili0es.891 MMT Storage Sea;le 1 facility.150 MMT Storage Longview 1 facility.150 MMT Storage Vancouver (WA) 1 facility.127 MMT Storage Terminal Vessel Loading Rates PNW = 2,219 tonnes / hour BC = 2,567 tonnes/ hour

26 Summary This is potentially the largest crop in Canadian history Changes in the system and other ongoing initiatives will continue Challenges this crop year: Vessel congestion at Vancouver is already a major concern, as is railway car supply/ capability to supply capacity Port terminal capacity at Vancouver is sold through to February 2014 Prices fell but have stabilized/ rebounded some Changes to the CGC mandate Elimination of Inbound inspections on Aug 1 Data responsibility and processes While not yet a crisis, it is a good problem to have

27 Thank You