Feeding Texas longhorns? Canada farmers cash in on U.S. drought

Sun Aug 12, 2012 10:36am EDT
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By Rod Nickel

WINNIPEG, Manitoba (Reuters) - After spring floods drowned his seeding plans two years straight, Canadian farmer Walter Finlay is harvesting what looks to be an average or slightly better crop of wheat and canola.

Average will do just fine this year.

The worst drought in a half century in the U.S. Midwest has scorched corn and soybean crops, igniting grain and oilseed prices and leaving farmers in Western Canada poised to profit nicely off the misery of U.S. growers.

"You hate to see anybody have a hard time," Finlay said from his farm near Souris, Manitoba. "There maybe is better opportunity just because of what's going on in the States ... the price of corn has obviously drawn the price of feed wheat up."

Canada is the world's seventh-largest, wheat-growing country, and the top exporter of spring wheat and durum, used in baking and pasta-making respectively. It's the biggest producer and shipper of canola, used to make oil for salad dressings and margarine.

Canadian farmers will harvest a record-smashing 16 million metric tons (17.6 million tons) of canola this year, and the biggest wheat crop in three years, according to a July poll by Reuters of traders and analysts.

Already farmers are finding new markets for their crops, as Canadian wheat replaces scarce U.S. corn in feedlots, coming to the rescue of livestock and poultry industries that are scrambling to feed their animals. Oilseeds users are also looking to plentiful canola rather than soybeans.

"I certainly know buyers of feedstocks are looking wherever they can in the world to find it," said Sam Miller, managing director of agriculture at BMO Harris Bank.   Continued...

A damaged corn crop in Rice County, in central Kansas August 7, 2012. REUTERS/Jeff Tuttle