MarketsFarm — As fuel prices continue to rise due to Russia’s invasion of Ukraine, surcharges for grain shipments are also increasing — leaving many to wonder about feed grain costs moving forward.
“I think we will be seeing an effect coming up,” said Brandon Motz, owner and sales manager of CorNine Commodities at Lacombe, Alta. “We’re (already) seeing fuel surcharges 35 to 40 per cent above the base rate. Historically, it was considerably lower than that.”
Diesel fuel, he said, “has gone up 20 cents since (March 4) here in Alberta and 40 cents in the last month and a bit.
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“You can’t have cheap freight rates and expensive fuel. It’s not going to work. So the trucking industry will have to sit up straight and make sure that we stay on top of these freight rates, for sure.”
However, Motz was quick to add, rising fuel prices are not the only reason for rising feed grain prices, implying that a lack of supply has also provided support.
“We’ve seen definite inflation going on in all of the ag space, whether it’s fuel or grain. Yes, fuel is a contributor to higher grain prices. The question is with the current global situation, is it just driven by fuel?…I think it’s one of many factors that will keep grain prices high,” he said. “We have 29 million tonnes of grain in the Black Sea region we can’t get access to. It’s events like that that are also helping grain prices.”
Also looming in the background is a potential strike by workers at Canadian Pacific Railway (CP) if a new collective bargaining agreement isn’t reached by March 16. While this may affect corn deliveries into Alberta feedlots, Motz believes it will still be the crop of choice.
He said corn is being priced at approximately $425 per tonne ($10.80 per bushel). Meanwhile, the high-delivered bid for Alberta feed barley is at $9.80/bu., and $12.93/bu. for feed wheat, according to Prairie Ag Hotwire.
“In this feeding space, the feedlots are always looking for an opportunity to feed cheaper. Looking in the back window, I don’t see wheat or barley becoming those options unless something changes with current supply or if something shifts,” Motz said.
“We have the chance of another dry year… It’s kind of a day-by-day market we’re in right now and in the foreseeable future.”
— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.
