More grain heads south | Canadian truck traffic at U.S. elevators is up as rail shipments stall
SAN ANTONIO, Texas — Canadian wheat is having a tough time getting to many export markets this winter, but there is one important destination where sales are brisk.
Shipments to the United States are way up, according to U.S. Wheat Associates.
“We are a little concerned about the transportation issues that you’re suffering in Canada and the potential for that moving more (grain) than otherwise … to the south,” USW president Alan Tracy said during an interview at the 2014 Commodity Classic conference.
“The biggest increase percentage wise has been by truck, and it has been substantial.”
Tracy didn’t have data at his fingertips, but he has heard reports that Canadian truck traffic at U.S. elevators is up 50 percent.
Canadian statistics back up his observation of a big increase in sales south. Canadian wheat exports to the U.S. are 1.1 million tonnes though the first six months of 2013-14, according to the Canadian Grain Commission, which counts bulk shipments.
It is up from 788,400 tonnes for the same period a year ago and 614,400 tonnes for the first half of 2011-12.
Statistics Canada, which tracks all exports, says wheat exports to the U.S. to the end of December totaled 1.42 million, up from 1.04 million in the same period the previous crop year.
Tracy said the open market sorts out where Canadian wheat should be moving, and right now there is a strong incentive for it to flow south instead of east or west.
“There are some fairly substantial price differentials at the border these days for similar types of wheat, and there is really no restriction for wheat coming south,” said Tracy.
The increased Canadian truck traffic causes some friction with U.S. wheat farmers, but there is no denying that strong demand exists for the product.
“There is still a need for Canadian wheat in the United States, to be frank about it,” Tracy said.
“We’re Canada’s largest customer for wheat.”
However, he would like U.S. wheat to have equal access to the Canadian marketplace, which isn’t the case now because Canada’s variety registration system treats all U.S. wheat as general purpose wheat.
Tracy said he has spoken to Canadian government officials and industry groups about those concerns, but not much action has been taken on the issue. He understands that providing equal access to Canada is on the backburner while the Canadian wheat industry continues moving to an open market, which is something USW has wanted for decades.
“Hopefully our guys remain somewhat patient,” he said.
In the meantime, Canadian grain will continue moving south.
Not all of it is staying in the U.S. There has been an increase in the amount of Canadian grain using the U.S. rail system to get to ports on the West Coast.
“We’re a little congested too but that doesn’t frankly bother us too much. We have the port capacity to be of help there,” said Tracy.
As well, there have been positive export developments for U.S. wheat farmers as a result of Canada’s transportation quagmire.
“We’ve had some wheat accelerated out of the U.S. to kind of fill in the backlog or the shortage of Canadian wheat,” said Tracy.
In particular, sales of U.S. wheat to northern Asia have been stronger than usual because customers can’t get the Canadian wheat they ordered.