Canada aims to leapfrog U.S. in global wheat trade
By Rod Nickel and Karl Plume
WINNIPEG, Manitoba/CHICAGO (Reuters) - Canada is aiming to supplant the United States as the Western Hemisphere's dominant wheat exporter, as its invigorated grain-exporting sector cashes in on weakening currency and cheap freight rates.
Canada overtook the United States in 2014/15 in wheat export volumes for the first time, exporting 24.1 million tonnes. It is forecast to fall short of eclipsing U.S. shippers in 2015/16, with both countries trailing top exporter Russia.
A once large gap is steadily narrowing, however, with U.S. wheat exports forecast this year at a 44-year low, and Canadian shipments up nearly 30 percent during the past decade.
Favorable dollar exchange currently allows Canadian exporters such as Richardson International, Glencore-owned Viterra Inc [VILC.UL] (GLEN.L: Quote) and Cargill Ltd [CARGIL.UL], to undercut U.S. prices in some markets, traders say. Record-low ocean freight rates .BADI have also extended Canada's reach.
"I do think we will see the current trends in both countries continue, which would result in Canada being the leading exporter more years than not," said Cam Dahl, president of industry group Cereals Canada.
The United States also faces stiffer competition from Argentina, whose wheat prices tumbled last month after the country devalued its peso and scrapped export taxes.
As currencies weaken against the greenback, some buyers are turning to Canada and other suppliers first, and the United States only if necessary, said Rhyl Doyle, director of export trading at Canadian grain handler Paterson Grain.
"They are gradually becoming the emergency storehouse," Doyle said.Mexico, Peru and some Caribbean countries have shifted purchases to favor more lower-quality wheat from the Black Sea region for blending with high-quality Canadian wheat, resulting in cheaper supply than U.S. hard red winter wheat to produce bread, Doyle said. Continued...