June 16, 2006

Canada's grain industry could see improved year-study

After five years alternating between drought and heavy rain, Canada's grain farmers may be due for a break in the weather, the Dominion Bond Rating Service (DBRS) said Wednesday (Jun 14).

DBRS is a rating service that analyses debt

All major grain-handling companies were negatively affected on some level by adverse weather conditions during the past five years, said Walter Schroeder, DBRS president. This year however, the industry is poised for better performance, Schroeder said.

Companies in the Canadian grain-handling industry have reduced or restructured their debt while low return investments have been divested or disposed, Schroeder said.

Since 2000, small and inefficient grain elevators were replaced by large, more efficient ones, thus enabling its numbers to be cut from 888 to 356.

DBRS expected normal weather to make higher returns for the companies invested capital.

Normal temperatures along the grain belt are expected to last throughout summer and normal precipitation is expected in most of the central Prairies. However, most of Alberta and eastern Manitoba were expected to receive below normal rainfall.