The Dominion Bond Rating Service (DBRS) has released its annual study on the Canadian Grain Industry, according to a press release issued yesterday.
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The theme is a continuation on last year’s study that “The grain handling industry is running out of time to overcome the structural challenges that it is facing” and concludes that the outlook for future profitability remains challenging.
The study examines the issues facing the Canadian grain industry and analyses the performance of the sector’s main competitors, Saskatchewan Wheat Pool, UGG/Agricore and Cargill Limited, and for the third consecutive year every grain handler’s ratings were downgraded.
DBRS explained that the downgrades reflect concerns that exist for the individual companies as well as the structural challenges facing the entire industry.
On a positive note, the DBRS welcomed the planned merger of United Grain Growers and Agricore as “one of the first positive developments for the industry in some time [which] does help to improve the structural problem of too many competitors and excess capacity”.
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By GlobalDataIt also notes however that drought conditions across many parts of southern Alberta and south western Saskatchewan are likely to mean that this year’s crop will be well below average.
