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With the approaching fall season, railways are getting ready to ship a lot of grain soon.
That includes CN Rail, with Assistant Vice President of Grain David Przednowick saying that they're trying to estimate those crop sizes by the end of the month.
“I think there's an expectation that year-over-year carry-in stocks have grown, but we're waiting to see what the Stats Can commercial and farm stocks estimates are as of August 1 ... That's very important because as of the middle of July, for example, we had over 4000 cars in storage, most of those in the long term. So we're working through inspections, getting equipment ready."
Making sure they're able to put their best foot forward is key for the company this fall.
"Getting the harvest signal right is really critical when you go from 0 to 60, so to speak, you go from a period of low demand to really ramping up hard when we get into the back end of September when it's all systems go across all grain growing regions of Western Canada, said Przednowick, "Therefore you really need a good demand signal to be able to allow all aspects of the supply chain to work on all cylinders to perform at optimal performance levels.”
Drought has also been a factor that's led to a highly variable harvest, which leaves CN in a position of wanting the best information possible.
"In the 2023-24 grain plan, we certainly commented on the uncertainty around what grain production would end up being in Western Canada. They haven't gotten a lot of help recently in the prairies with the way the rains were over the past month. We do expect the crop to be below average. A couple of weeks ago, we signaled on our quarterly investor call that there was a range of estimates out there, but at the time we were estimating a crop in the mid-60s. There's probably been crop deterioration since then.”
“We will see what the impact of that will be on the last half of September demand through the fall time. In terms of overall customer demand, given that the crop will be below average, we always know there's a big push at harvest time, but the peak of what demand will be is going to be in question this year as to how high that gets given the impacts of the drought in certain areas of Western Canada.”
The recent resolution to the strike at Vancouver port is something that wasn't a major factor for CN, but they're nonetheless glad to see resolved.
"A couple of weeks ago, we were indicating that it would take up to 8 weeks to fully recover from the impacts of the supply chain disruptions, given that the rule of thumb is for every day you have a disruption of that nature, probably takes five to seven days to get to normal business activities. So we're working through that," said Przednowick, "It's gone pretty well so far. We expect to be in good shape here as we head into harvest time when we do see that ramp-up in demand.
Przednowick says he hopes the harvest goes well for farmers and everyone stays careful while doing so.
"We're just working closely with customers to get that demand signal right and I hope everybody has a good harvest out there. We are going to start ramping up here and hopefully have a good harvest. I know that the drought has impacted production in a lot of areas of the prairies, unfortunately. But for those who are out in the field and all starting to ramp up, please have a safe harvest.”
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