March 21, 2013

 

Canada's 2012-13 corn exports to US may reach one million tonnes

 

 

As a large Ontario crop backfills demand after last year's severe US drought, Canadian corn is flowing to US ethanol plants and feed suppliers in larger than usual volumes, with up to one million tonnes expected in 2012-13.

 

Canada is normally a net importer of corn, feeding Eastern Canada's pigs and poultry and supplying Ontario ethanol plants. But the worst US drought in more than 50 years has forced corn buyers to look north.

 

"Ontario had not a lot of rain last year, but it was timed almost perfectly so we had the biggest corn crop in history in Ontario in 2012," said Steve Kell, grain merchant at Parrish & Heimbecker (P&H). "It's just a natural redistribution. And it's moving."

 

Ontario accounted for about two-thirds of Canada's 13.1 million tonne corn harvest.

 

Kell expects over one million tonnes of Ontario corn to move into the US in 2012-13, and maybe more if there are US corn planting delays. That would be the second-biggest Canadian corn export programme on record, after nearly 1.7 million tonnes were shipped two years earlier following a poor coarse grain harvest in Europe. Agriculture and Agri-Food Canada forecasts total Canadian corn exports to more than double in 2012-13, to one million tonnes, from the previous year.

 

The USDA increased its corn import forecast this month to 125 million bushels, the highest on record and up from an estimated 29 million bushels in the 2011-12 marketing year. Nearby corn futures on the Chicago Board of Trade have pulled well back from the record high they set in August, but are still 12% higher over year. US corn imports from Canada are not unusual, although the amounts this year are.

 

"Mostly it's just small domestic rail shipments. It's mostly for feed, kind of the same path it always takes, showing up in Ohio and a few other places," said one US grain exporter.

 

Canadian exporters say Ontario corn is flowing into Michigan and New York ethanol plants in particular. The Great Lakes will open for navigation later this month, and there has been increased movement of corn to terminals on the lakes to prepare for transport by ship, Kell said. Once ship traffic begins, Canadian corn can more easily reach markets like Toledo, Ohio, he said.

 

Winnipeg, Manitoba-based P&H has five grain terminals on the Great Lakes in Ontario and three of those - at Goderich, Hamilton and Owen Sound - are actively moving Canadian corn, he said.

 

It's unlikely that Canadian supplies are weakening US corn basis levels much, said Lynne Cohoe, owner of Homeland Grain Inc., a grain dealer at Burgessville, Ontario. The company has consistently shipped most of its corn sales into the US for the past two months.

 

Still, the influx of Canadian corn had kept a lid on basis in the closely watched Toledo market and could continue to anchor values once lakes shipping resumes. The corn basis bid at a major grain company's Toledo terminal eased by US$0.05 a bushel this week to the lowest level in nearly a month, largely due to a wave of US farmer selling of old-crop corn last week.

 

Canadian supplies come to the US with additional freight costs, as well as extra time and paperwork to cross the border, Cohoe said. "Obviously our basis is considerably lower than in the US and that's why (corn) is going there," she said. "It's a benefit for everybody right down to the producer because it's certainly raising basis bids in Ontario, or at least keeping them from going lower."

 

Agriculture Canada expects Canadian corn plantings for 2013-14 to ease slightly to about 3.5 million acres, but brisk exports may tempt farmers to sow more acres, Kell said.