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Canada’s Rail Upsets May Stall Much-Needed Grain Shipments

·2 min read

(Bloomberg) -- The world desperately needs more grain, and Canada is set to harvest a bumper crop. The only problem is that snags in the country’s railway system may make it difficult to ship.

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Last year, the nation’s two major railways struggled to move Canada’s much smaller 2021 crop amid disruptions from wildfires, floods and extreme weather. This year, the northern nation will likely harvest its third biggest wheat crop on record and 42% more canola.

“They couldn’t do a crop that’s 40% lower. What’s going to happen when we have a normal one again?” said Mark Hemmes, president of Quorum Corp., a company hired by the federal government to monitor Canada’s grain-transportation system. “Anybody in this business is worried about it.”

Canada’s harvest rebound comes as world grain supplies have been uncertain following the war in Ukraine and as extreme weather trimmed output in parts of Europe. Drought is also shrinking crops from the US Farm Belt to China. Soaring commodity prices are also contributing to food inflation that’s been gripping the globe.

The bumper crops are in line with Canadian National Railway Co.’s grain plan, said spokesman Jonathan Abecassis. The country’s largest railway said in July it expects to move as much as 27 million metric tons in the crop year starting Aug. 1.

Canadian Pacific Railway Ltd. said in an emailed statement that it’s “well-positioned to meet the transportation needs of our grain customers and the broader Canadian economy during the 2022–2023 crop year.”

Meanwhile, demand for Canadian grain is skyrocketing from foreign buyers searching for supplies, said Wade Sobkowich, the executive director of Winnipeg-based Western Grain Elevator Association, which represents businesses that move more than 90% of the country’s bulk grain exports.

“We’re very worried,” Sobkowich said Tuesday by phone. “This fall represents the most important grain harvest in Canada in a generation.”

(Updates with Canadian Pacific statement in sixth paragraph)

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