By Rod Nickel and Karl Plume
WINNIPEG, Manitoba/CHICAGO, Jan 26 (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 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.
But export-focused industry group U.S. Wheat Associates,
doubts Canada will consistently out-ship the United States, and
says a build-up of Canadian stocks may be behind last year's
anomaly.
"Overall, they are not going to exceed us as a wheat
exporter," said Alan Tracy, U.S. Wheat Associates president,
adding that the U.S. system is more efficient.
Recent investments by Canadian grain handlers aim to change
that. Grain handler G3 Global Grain Group BG.N is planning a
new grain terminal at Port Metro Vancouver, while Cargill,
Richardson and Viterra are upgrading port facilities there to
ship more grains and oilseeds to Asia.
By contrast, expansion of grain export terminals in the U.S.
Pacific Northwest has slowed since the 2011 opening of a
$200-million Longview, Washington, grain terminal owned by EGT,
LLC. It is the only new grain export terminal built in the
United States in the past 30 years.
The region has seen no grain terminal expansions since 2013,
said one PNW exporter, who was not authorized to speak publicly.
After Canada in 2012 scrapped the Canadian Wheat Board's
marketing monopoly, grain handlers who handle a variety of
commodities are now directing export sales, not the board.
That has allowed companies to combine different crops on
bigger vessels headed to a common region, adding to freight
savings, said Terry James, vice-president of export marketing at
Richardson International.
"I think the buyers are becoming more accustomed to this out
of Canada, and they are reacting accordingly by putting cargoes
to us," James said.