CN strike drags on, hitting grain exports, fertilizer output

Farmers dump bags of corn grain in front of the Papineau riding office of Prime Minister Justin Trudeau in Montreal, as they protest the lack of propane due to the CN strike, on Nov. 25, 2019. (Photo: Reuters/Christinne Muschi)

Ottawa/Montreal | Reuters — A prolonged strike at Canadian National Railway, the country’s largest railroad, sent further shocks through the economy on Monday with grain shipments scuttled and layoffs planned at fertilizer producers and an auto shipment terminal.

As Canada’s biggest rail strike in a decade entered its seventh day, industry kept pressuring the government to intervene. The Teamsters Canada Rail Conference, the union representing the 3,200 striking CN employees, said it was no closer to an agreement than when its members first hit picket lines.

The Unifor labour union said 70 employees would be laid off effective Thursday at a Nova Scotia facility contracted by CN to handle vehicles shipped in and out of Canada.

Meanwhile, frustrated farmers facing propane shortages dumped wet corn in front of the prime minister’s local Quebec office and pleaded for the government to intervene.

Striking conductors and yard workers are demanding improved working conditions, including worker rest breaks. The federal government has sidestepped industry calls to force employees back to work, insisting collective bargaining is a quicker solution.

“Every option (is) always on the table, but for the time being we hope that both parties will get to an agreement and that will be the fastest way,” federal Agriculture Minister Marie-Claude Bibeau told reporters in Regina.

Canada relies on CN and Canadian Pacific Railway to move products such as crops, oil, potash, coal and other manufactured goods to ports and the United States. Industry figures show about half of Canada’s exports move by rail, and economists have estimated a prolonged strike could eat into economic growth.

A CN spokesman said company officials continue to negotiate and called for binding arbitration, a demand the union has rejected thus far.

Vessels pile up

The strike left at least 35 vessels waiting at Canada’s West Coast to load grain shipments, Mark Hemmes, president of Quorum Corp., which monitors the movement of Prairie grain for the Canadian government, told Reuters. Hemmes said many of the grain handling facilities at major ports on the West Coast are serviced only by CN.

Shipments from those ports supply international markets, including Asia.

An association of Canadian exporters has declared event of delay, allowing members to avoid contract penalties due to circumstances outside their control.

Nutrien said it was preparing to shut down its largest potash mine, at Rocanville, Sask., for two weeks effective Dec. 2.

The north shore of Port of Vancouver’s Burrard Inlet is home to a major potash and coal export terminal as well as grain terminals operated by Cargill and Richardson International that are normally serviced only by CN.

A “trickle of cars” from CP was reaching the grain terminals, but they are “for all intents and purposes shut down,” said Wade Sobkowich, executive director of the Western Grain Elevator Association.

Cargill spokeswoman Connie Tamoto said the company had taken “mitigation measures” to ensure customer needs are met.

Richardson International did not respond to requests for comment.

Around 300 farmers, angry at a shortage of propane they need to dry grain, gathered with a dozen tractors near Prime Minister Justin Trudeau’s parliamentary office in Montreal on Monday to demand government action to end the strike. Some farmers held bags of grain and signs that read “To dry grain, you need propane.”

CN is a key link in transporting propane to parts of Eastern Canada where it is also used to heat homes and hospitals.

— Reporting for Reuters by Kelsey Johnson in Ottawa, Allison Lampert in Montreal and Arunima Kumar in Bangalore; additional reporting by Rod Nickel in Winnipeg, David Ljunggren in Ottawa and Christinne Muschi in Montreal.

MarketsFarm -- Ongoing trade wars between the United States, Europe, and China may open the door to new markets for Canadian edible beans. According to reports, the European Union is bracing for tariffs from the U.S. on billions of euros worth of European goods, adding to the litany of other global trade wars. If trade relations between the U.S. and Europe sour, Canadian beans may become an attractive alternative. However, this potential opportunity must be coupled with specific growing and harvesting conditions in order to produce marketable beans. "Beans are a very delicate product," said Marcos Mosnaim, a trade manager with CanPulse in Mississauga. "If we get too much water, it's not good. If we get too little, it's not good. You need to have good, specific quality, depending on who the final buyer will be." Mosnaim emphasized that quality continues to be the driving factor for markets. "The issue between the U.S. and Europe won't matter if our beans aren't good quality. Europe won't take them." Packing-quality beans require certain aesthetic standards that are largely dictated by weather. "It's less about how they cook, and more about how they look," he said. Canning-quality beans require a strong, solid hull for cooking. "The harvest time, the processing time, and the weather has to help." Canning-quality kidney beans will be around 45 to 50 cents in 2019, Mosnaim said. Cranberry bean prices are also contingent on Europe's large crop, and have stabilized around the 40- to 45-cent range. Mosnaim anticipated the price would remain steady unless Europe's crop deteriorated. Similarly, if navy beans are of good canning quality, demand will keep prices around 34 to 35 cents. "There will be demand, so that's a good bean to grow this year," Mosnaim said. The U.S. typically produces the lion's share of navy beans imported by Europe. Previous crops were lower than expected, so there is currently very little carryover stock. "Whatever is harvested this year will be easy to market, so long as the quality is good." -- Marlo Glass writes for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.

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