An increasing volume of Canada-produced corn is seen shipped to Europe, recording the country’s biggest growth of corn exports in recent four years, according to report. Traders believed that this is largely helped by retaliatory tariffs imposed by the European Union on the United States, which has shut the door on American corn.
According to data from the Canadian agricultural department, corn exports to western European countries surged 85 percent year on year during the nine months from September 1, 2017, the start of a corn marketing year in Canada, and are estimated to amount to 1.2 million tonnes in the 2017/18 year, the biggest figure since 2013/14.
Canada is the fourth largest wheat exporter in the world, although its share of global corn exports last year was recorded at only less than 1 percent.
Its shipments to Europe have continued to ramp up, however, as a result of reduced freight costs and a Canada-European Union free trade agreement that came into effect in 2017, allowing Canadian corn to enter Europe without tariff.
European imposition of tariffs against U.S. corn in June have further encouraged Canada-EU corn trade, said Carsten Bredin, vice-president of Grain Merchandising Department at Richardson International, Canada’s biggest company in agricultural and food industry.
“Canada is in a great spot” in Europe and EU importers are buying both current supplies and the next harvest, he said.
Canada’s growing corn exports to Europe come as an result of Washington’s attempt to resume global trade protectionism under President Donald Trump, which will not always benefit the US. Trump administration is considering a compensation of billions worth to aid American farmers suffering loss from escalating trade war.
The European Union imposed 25-percent tariffs on imports of $3.3 billion worth of US goods, including U.S. corn that sells well in the world for its usually cheapest prices, to fight back on U.S. tariffs imposed on European steel and aluminum products.
The EU’s turn to Canada instead of the United States to balance corn demand could weigh on corn futures Cc1 on the Chicago Board of Trade that have already traded near the lowest in a year.
Drought and high temperatures in some of the north European regions have also badly affect crop growth, giving rise to higher reliance of livestock farms on imported grain to feed animals.
Just for last week, Canada sold 25,000 tonnes of corn to the United Kingdom and 22,000 tonnes to Ireland, according to European trade sources, with unconfirmed talk of much more sales.
“It’s discouraging knowing the U.S. (corn) is cheap and could capture that business without the tariffs,” said Terry Reilly, analyst with Futures International.
During the nine-month period between Sept. 1, 2017 and May this year, corn exports from Canada to western European countries totaled 886,000 tonnes, including 539,000 tonnes to Ireland, Canadian government data showed.
“The retaliatory EU tariffs on U.S. corn would naturally take the U.S. out of the picture,” one German trader said.