US wheat exports unaffected by Canada rail strike

CHICAGO Wed Dec 2, 2009 1:53pm EST

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CHICAGO Dec 2 (Reuters) - U.S. wheat traders shrugged off news of a railroad strike in Canada, a major wheat producer and exporter, as any supply disruption was expected to be short lived and unlikely to shift demand to the United States.

The strike involving 1,700 locomotive engineers with Canadian National Railway (CNR.TO) (CNI.N), which began on Saturday, has choked Canada's grain transportation system during the busy post-harvest season.

But a resolution could come as soon as Thursday.

U.S. traders said they have not yet seen any shift in demand from global buyers away from Canadian wheat to U.S. supplies.

"One of our PNW (Pacific Northwest) exporter clients said yesterday that it had felt no material difference since the strike started. He didn't expect Canadian Western Red (hard red spring wheat) to be any less competitive into the Asian market," said Brian Liedl, analyst for Minnesota-based brokerage Country Hedging.

"Japan is currently buying for the mid-February (shipment) slot, and I imagine that any issues will be worked out by then," he said of the major wheat importer and top buyer of U.S. wheat.

Canada's Parliament was set to start debate on Wednesday on a bill to end the strike which it says could endanger economic recovery. The earliest passage of the back-to-work bill could be Thursday. [ID:nN02544166]

"Given the Canadian government's willingness to eliminate any significant walkout, the impact of this news on wheat is probably minimal," said Jerry Gidel, analyst for North America Risk Management Inc.

Traders said the unlikely scenario of a prolonged strike could ultimately divert some global demand for high-quality wheat from Canada to the United States.

"Long term, you can make some of those switches if you want to move some of those cargoes or buy replacement cargoes, but it's always easier said than done. It would take a pretty prolonged strike up there to impact our market or export sales," said a U.S. wheat exporter. (Additional reporting by Sam Nelson; Editing by Christian Wiessner) ((karl.plume@thomsonreuters.com; +1 312 408 8720; Reuters Messaging: karl.plume.reuters.com@reuters.net)) ((For help: Click "Contact Us" in your desk top, click here [HELP] or call 1-800-738-8377 for Reuters Products and 1-888-463-3383 for Thomson products; For client training: training.americas@thomsonreuters.com ; +1 646-223-5546))

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