A shortage of Canadian oats due to rail shipping bottlenecks has so far not affected production at the PepsiCo Quaker Oats plant in Cedar Rapids.
Delays moving oats out of Canada into the United States have limited the amount available to process into food products or to feed to livestock. Record crops of wheat and canola, along with frigid weather, overwhelmed Canadian National Railway and Canadian Pacific Railway this winter, resulting in overdue orders for tens of thousands of grain cars.
“We will continue to monitor the situation closely. However, we do not anticipate any business interruption at our Cedar Rapids facility at this time,” said Candace Mueller-Medina, senior director of communications for Quaker Foods North America in a statement.
“Our team is dedicating a tremendous amount of time and energy to ensure consumers receive the high quality oats they have come to expect from us.”
Between the Canadian Pacific Railway and the Canadian National Railway, there are about 25,000 grain cars available. The railroads typically allocate between 10,000 and 11,000 cars per week to grain transport.
The United States imported 53 percent of the oats it consumed in the 12 months that ended May 31, with most of the supplies coming from Canada, according to Bloomberg News.
Increasing the supply of Canadian oats will take several months and getting supplies from Europe is taking longer than expected, according to Shawn McCambridge, senior grain analyst with Jefferies Bache LLC in Chicago.
“When prioritizing which grain receives rail cars, grains are not at the top of the list and oats are not at the top of the grains list,” McCambridge said in a note to clients earlier this month.
“The general saying in this part of the industry is the last thing that is run through the mill before supplies run out is the buyer, because it is very costly to shut a processing facility down.”