Bored Canada Grain Exporters Survive Drought by Buying U.S. Corn

It’s so quiet on the drought-stricken Western front that nimble Canadian grain exporters are becoming importers.

Dry conditions zapped as much as 40% of Western Canada’s grain output, curtailing exports and sending the price of feed grains such as barley to all-time highs. In response, Canadian companies are buying the most U.S. corn in two decades.

Grain shipper Parrish & Heimbecker is importing in as much as 10,000 tons of American corn a month at some of its Prairie elevators, at a time when the company would normally be slammed with crop deliveries and rail exports.

“We as an industry are taking advantage to do business however we can,” said David Yarycky, general manager of Parrish & Heimbecker’s elevator in Dugald, Manitoba. “We are choosing to pivot to other ways to keep our business strong.”

The dearth of grain has shifted trade flows and is leaving the cattle industry in a squeeze for feed. The price of feed barley and wheat in Alberta, the nation’s largest cattle-producing province, has surged more than 60% from a year earlier, according to data from Farmers Advanced Risk Management Co.

“If the elevators aren’t bringing in corn they’re just sitting there staring at each other,” said Jerry Klassen, market analyst and commodity trader at Resilient Capital in Winnipeg, Manitoba. “There’s no crop.”

Canada could import as much as 4 million tons of U.S. corn to make up for the shortfall, Klassen said. That’s more than double a year earlier and the most since the 2001-02 season, according to the U.S. Department of Agriculture. The U.S. expects Canada to import 3 million tons for the 2021-22 crop year, up from 1.58 million the year earlier, USDA data show.

Feedlot operators are concerned there could be feed shortages in early 2022 if railways are unable to handle the unusually high corn volumes, said Janice Tranberg, president and chief executive officer of the Alberta Cattle Feeders Association. Trucker shortages are also causing delays moving American grain from rail cars to Prairie farms, she said.

“There is some worry going forward on how are we going to assure we can get enough feed,” Tranberg said. “Farmers are trying to take what they can get.”

Bloomberg

Tags: corn, Canada, USA