The amount of last year's crop still in storage on farms is much larger than in previous years.
This was confirmed in the Statistics Canada stocks report released yesterday, which said on-farm supplies of canola were 66 percent larger on December 31st than a year ago, while on-farm wheat stocks were up 52 percent.
The amount of grain in farmers' bins will likely remain well above average into next year's harvest, says Wayne Palmer, senior analyst with Agri-Trend Marketing.
"Canada is experiencing a transportation debacle. We cannot get grain from the country to the port in a timely fashion. We're so far behind, we most likely won't catch up until the end of this year, which is very disconcerting to producers," he says.
He notes elevator companies are not making forward sales because they don't believe they will have adequate rail service to meet contract terms.
"They're trying to get sales completed that are up to 10 weeks behind with vessels waiting. They're defaulting on past contracts, so they cannot afford to take a chance that rail movement will get any better in probably the next six to 12 months," says Palmer.
While the industry searches for solutions, he says it will likely just take time to clear the current backlog.
"We need a miracle to straighten it out and nobody knows how to straighten it out. Time is your only saving grace. Unfortunately the producer is the one who is being penalized for this whole thing because basis levels are very wide. Exporters and elevator companies cannot forward sell anything when they're afraid they're going to default on the contract."