Canada Grain Handlers to Expand, Crops Overwhelm System

Three Canadian grain handlers said this week that they will expand facilities to handle the country's crops, after a record-smashing harvest overwhelmed the transportation system.

Viterra, owned by Glencore Xstrata PLC, said on Thursday it will spend C$100 million ($92 million) to boost grain shipping through Port Metro Vancouver, while CWB, formerly known as the Canadian Wheat Board, said it is building a second Western Canadian grain elevator.

Global commodities trader Cargill Ltd said on Wednesday that it would expand an elevator site in Manitoba.

The moves come as the country's grain handlers and railways have struggled to move a record harvest to port, causing a massive backlog.

Last year's 76-million tonne Western Canadian crop was larger than expected due to nearly ideal weather during the growing season. But with seed technology companies developing crop varieties to produce bigger yields, the industry expects harvests to trend higher over the long term.

Viterra said it will modernize its Pacific Terminal at the country's busiest port to increase grain shipping and storage.

"Our goal is to create the most efficient port terminal in Canada with unprecedented capability for processing a diverse range of commodities," said Kyle Jeworski, Viterra's chief executive for North America.

Work on the terminal, which handles crops like peas, canola, flax, lentils, soybeans and corn, is expected to wrap up by 2016. Viterra also said last week it would build a new grain elevator at Kindersley, Saskatchewan.

CWB has started construction of a 42,000-tonne grain elevator near Colonsay, Saskatchewan, with track able to accommodate 134 rail cars. The Colonsay elevator and one under construction near Portage la Prairie, Manitoba, are expected to be ready for the 2015 harvest, CWB said.

Cargill will add 20,000 tonnes of grain storage space for a total of 30,000 tonnes at Morris, Manitoba, and equip the site to allow 100 rail cars to load grain, nearly double the current number.

The expansion is expected to start within the next month and be complete in time for the 2015 harvest. Cargill did not disclose the cost.

In the past year, Cargill has also announced expansions at its grain-handling sites at Viking, Alberta, and Rosetown, Saskatchewan.

Richardson International Ltd last year said it would spend C$40 million ($37 million) to expand its Western Canadian grain-handling and crop input centers, and received approval from Port Metro Vancouver to expand its grain terminal there.

Last year's huge Western Canadian harvest in combination with a frigid winter overwhelmed railways and led to Canadian legislation aimed at smoothing the flow of grain to port.

On Wednesday, Canadian National Railway Co Chief Executive Claude Mongeau said the railway would consider expanding its capacity if grain handlers do the same.

($1=$1.09 Canadian)

(By Rod Nickel; Editing by Lisa Von Ahn and Peter Galloway)