Winnipeg/Chicago | Reuters — Canadian corn is flowing into Europe at the fastest pace in four years, helped by retaliatory tariffs against the U.S. by the European Union that has shut American corn out of the bloc, traders said.
Corn shipments to western European countries rose 85 per cent year over year during the nine months from the start of Canada’s corn marketing year on Sept. 1, and are on pace for a total of 1.2 million tonnes in 2017-18, the most since 2013-14, according to Canadian government data.
Canada, the fourth-largest wheat shipper, accounted last year for less than one per cent of the world’s corn exports.
Its sales to Europe are increasing, however, thanks to low freight costs and a Canada-European Union free trade deal that took effect in 2017, giving Canadian corn tariff-free access to Europe.
European tariffs against U.S. corn imposed in June have further sped up those sales, said Carsten Bredin, vice-president of grain merchandising at Richardson International, Canada’s biggest grain handler.
“Canada is in a great spot” in Europe, he said, adding that EU importers are buying both current supplies and the next harvest.
Canada’s growing corn exports to Europe are an example of U.S. policy redrawing global trade patterns under President Donald Trump, not always to the United States’ advantage. Trump was expected to announce billions in aid for farmers hurting from trade fights.
The European Union imposed tariffs of 25 per cent on 2.8 billion euros (C$4.3 billion) of U.S. imports, including U.S. corn that is usually the cheapest in the world, in response to U.S. tariffs imposed on EU steel and aluminium.
EU buyers rushed to import U.S. corn before the tariff was imposed, with shipments this year through May of 1.4 million tonnes, largely to Spain and the Netherlands, according to U.S. Department of Agriculture data.
The EU’s switch to buying from Canada instead of the U.S. could weigh on Chicago Board of Trade corn futures already trading near the lowest in about a year.
Crops in parts of north Europe have also suffered from drought and high temperatures, forcing feedlots to rely more on imported grain to fatten cattle.
Last week alone, Canada sold 25,000 tonnes of corn to the United Kingdom and 22,000 tonnes to Ireland, European trade sources said, adding there was unconfirmed talk of much larger sales. The shipments could not be verified because of a lag in official government trade data.
“It’s discouraging knowing the U.S. (corn) is cheap and could capture that business without the tariffs,” said Futures International analyst Terry Reilly.
Brazil, another major corn producer, typically exports more in the second half of the year, but is not usually a top supplier to Europe.
For the nine months from Sept. 1 through May, Canada shipped 886,000 tonnes of corn to western European countries, including 539,000 tonnes to Ireland, according to Canadian government data.
“The retaliatory EU tariffs on U.S. corn would naturally take the U.S. out of the picture,” one German trader said.
— Reporting for Reuters by Rod Nickel in Winnipeg and Michael Hirtzer in Chicago; additional reporting by Michael Hogan in Hamburg, Nigel Hunt in London and Ana Mano in Sao Paulo.Tagged Canada, Corn, European Union, free trade, tariffs, Trump