Strike action by workers at Canadian National Railway and Canadian Pacific Kansas City could have significant repercussions for the country's grains market, according to industry body the Grain Growers of Canada (GGC).
Members of the Teamsters Canada Rail Conference authorised a strike on 1 May. Industrial action at the two major Canadian railroad companies could begin as early as 22 May.
The parties have now entered a mandatory period of mediation. The GGC has called for a resolution to be reached in this period that safeguards Canada's grains supply chain.
Canadian grain trade operations are particularly dependant on rail logistics, with the vast majority of grain from producing regions transported to ports by rail — 94pc of all Canadian grain is transported by rail, according to the GGC.
Disrupted logistics could limit grain storage capacity, which could result in less stock available for export and curb selling by farmers.
This could cause importers to seek alternative grains origins. Members are "worried about the impact a strike would have [...] on Canada's reputation as a reliable supplier", the GGC said.
"Consecutive supply chain disruptions have already strained our relationships with international buyers. Another stoppage could drive them to seek other markets, affecting us in the long term," GGC's second vice chair Brendan Phillips said.
In the high-protein wheat market — one of Canada's major agricultural exports — buyers may turn to US-origin Hard Red Spring wheat as an alternative, traders in both regions told Argus.
This could have a significant effect on the market. "In June 2023, Canada exported over 2.6mn t of grain, highlighting the potential economic loss of over $35mn for each day in June that a strike persists," the GGC said.
That said, wheat exports accounted for around 1.7mn t of this volume, Argus-aggregated data show. Canada's wheat exports have increased significantly ahead of the long-term average pace in 2024, surpassing 2023 levels by 710,000t in the week to 28 April. Remaining stocks of the 2023-24 wheat crop are low, according to market participants, and with the winter wheat harvest not scheduled to begin until July, low stocks could shelter Canada's wheat market to some extent.
