Canadian grain exports to the US have fallen sharply as railways expand the more-lucrative cross-border crude-oil shipments, a shift that Canada’s farmers say is pushing their crops to lower-priced overseas markets, The Wall Street Journal reports.
The shift of Canadian grain abroad is likely to prop up prices for US farmers and consumers, analysts say. In particular, wheat growers in states such as North Dakota and Minnesota could see higher bids for supplies from US buyers with less access to cheaper wheat across the border.
The decline in grain exports is an unintended consequence of recent regulatory changes aimed at guaranteeing farmers rail time in the face of stiff competition from crude by rail. Those changes aren’t always helping farmers, as rail companies look for quicker journeys for grain to meet federal requirements, sending cargoes to ports in Vancouver and along the St Lawrence River.
“If you’re looking to get the best asset utilization, you go to the ports,” Mark Hemmes, president of Quorum Corp, an Edmonton-based consultancy that monitors grain shipments for Canada’s government.
“That’s one of the major unintended consequences of the government’s order.”
Last March the Canadian government said that shippers such as Canadian National Railway Co and Canadian Pacific Railway Ltd each had to transport a minimum volume of grain every week.
Farmers pushed for the rule after their failure to secure railcar space meant some crops weren’t shipped or rotted in the field, underscoring the scarcity of train capacity amid extremely cold weather in the winter, a record grain crop and increased competition from crude.
Farmers typically don’t decide where their product goes. Grain and rail companies make those decisions based on such factors as price, timing and resource use.
Read more HERE.
The shift of Canadian grain abroad is likely to prop up prices for US farmers and consumers, analysts say. In particular, wheat growers in states such as North Dakota and Minnesota could see higher bids for supplies from US buyers with less access to cheaper wheat across the border.
The decline in grain exports is an unintended consequence of recent regulatory changes aimed at guaranteeing farmers rail time in the face of stiff competition from crude by rail. Those changes aren’t always helping farmers, as rail companies look for quicker journeys for grain to meet federal requirements, sending cargoes to ports in Vancouver and along the St Lawrence River.
“If you’re looking to get the best asset utilization, you go to the ports,” Mark Hemmes, president of Quorum Corp, an Edmonton-based consultancy that monitors grain shipments for Canada’s government.
“That’s one of the major unintended consequences of the government’s order.”
Last March the Canadian government said that shippers such as Canadian National Railway Co and Canadian Pacific Railway Ltd each had to transport a minimum volume of grain every week.
Farmers pushed for the rule after their failure to secure railcar space meant some crops weren’t shipped or rotted in the field, underscoring the scarcity of train capacity amid extremely cold weather in the winter, a record grain crop and increased competition from crude.
Farmers typically don’t decide where their product goes. Grain and rail companies make those decisions based on such factors as price, timing and resource use.
Read more HERE.
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