Canadian wheat, oil prices steady despite weather-driven rail, pipeline disruptions

Western Canadian wheat and crude prices remained steady Nov. 17 even as widespread flooding and debris flows in British Colombia shut down major rail and pipeline services into the province.

Canadian Western Red Spring Wheat 13.5% FOB Vancouver basis (30-45 days forward) was unchanged from Nov. 16, despite the Port of Vancouver being cut off from rail services. CWRS wheat was assessed Nov. 16 by S&P Global Platts at a $1.01/bushel premium to MGEX Hard Red Spring Wheat March futures.

Canadian National Railway and Canadian Pacific Railway, which service Western Canada, suspended some operations due to washouts along their main rail lines.

“Crews continue to perform critical repair work following the mudslides and washouts that interrupted the movement of railway traffic through southern B.C.,” said CN in an email. “Northbound and eastbound traffic from Vancouver, as well as inbound traffic to Vancouver from east/north of Kamloops are still impacted by the situation, crews are working as quickly as they safely can.”

“CP’s operations between Spenses Bridge and Falls Creek, B.C., remain suspended following heavy rains that have resulted in multiple track outages,” said CP in an email. “CP is working closely with authorities, including the Ministry of Transportation and Infrastructure, in our response to the situation. The safety of our employees and the public remains our priority. There is no time estimate for when service will resume.”

No bids were heard for 30-45 days forward CWRS wheat due to the possibility of forthcoming vessel delays and disruptions to terminal operations.

“All depends on how long this takes to fix; if Aussie rains continue and Vancouver is not operational in 3-4 weeks then we could see premiums jump,” said a market source.

Torrential rains are posing a threat to wheat crops in Australia. Australia’s wheat export prices have risen in recent weeks on expectations of a promising export program for the 2021-22 marketing year and growing quality concerns during the peak harvest season because of wet weather.

Canada’s Trans Mountain pipeline remained shut Nov. 17 after the company temporarily closed the line two days prior due to the widespread flooding.

Western Canadian crude oil prices had yet to reflect any major changes despite disruptions to crude flows to British Columbia. Western Canadian Select at Hardisty was assessed by S&P Global Platts at a $19/b discount to Cushing WTI Nov. 16.

“In order to restart the pipeline, we need to complete an assessment of the system in affected areas and are undertaking that work by air and on ground,” the company said in a statement late Nov. 16. A timeline to restart the line was not given.

Construction on the Trans Mountain expansion projection also remained halted due to weather in the Fraser Valley, Coquihalla and Interior regions of British Columbia.

Trans Mountain moved on average 326,000 b/d of crude oil and refined products during the first half of 2021 from Alberta to Vancouver and Washington, according to S&P Global Platts Analytics.

Of that combined total, some 300,000 b/d is crude oil and the remainder is refined products. Some 90% of the crude oil volume is made up of light sweet crudes, according to Platts data.

S&P Global Platts

Tags: wheat, British Colombia, Red Spring Wheat, pipeline, crude oil prices, prices, Canada