May 17, 2006

 

Canadian demand for US corn seen rising in 2006/07

 

 

The need to import US corn into Canada during the coming 2006/07 (August/July) crop year will increase from the level seen in 2005/06, according to industry sources.

 

Much of the imported US corn will be brought into eastern Canada, where a small crop in 2005/06 and another decline in production during 2006/07 will leave the domestic market short of corn, said Joe Wang, a coarse-grain analyst with the market analysis division of Agriculture and Agri-Food Canada.

 

A small amount of US corn will make its way into the feed deficit region of southern Manitoba in order to maintain the province's hog industry there, Wang added.

 

Wang forecast Canadian imports of US corn during 2006/07 at 3.300 million tonnes, which would compare with the 2005/06 projection of 1.600 million.

 

Of the 2006/07 forecast, roughly 700,000 to 800,000 tonnes of US corn could be imported into Manitoba while the rest will be shipped to eastern Canada, Wang said.

 

Wang pegged Manitoba's 2005/06 corn imports at around 650,000 tonnes, with the remaining amount heading to eastern Canada.

 

"Declining corn production in Ontario and the growing ethanol industry in that province will cause the jump in imports," said Mike Jubinville, an analyst with farmer advisory service ProFarmer Canada. "Other than that the only other area that might bring in some US corn will be the feed deficit regions of southern Manitoba in order to maintain the hog industry."

 

Jubinville said in drought years, it would not be unusual for 80,000 to 150,000 tonnes of US corn to make its way into Alberta and selected regions of Saskatchewan from Montana on a monthly basis to cover feedlot requirements. However, the ample feed barley supply situation in Western Canada will prevent the need to bring in US corn during 2006/07, much like it did during 2005/06, he said.

 

A drought-reduced crop in 2001/02 left barley supplies in Western Canada extremely tight and facilitated the need to bring in US corn to meet those needs, Jubinville said. Concerns about another drought in 2002/03 also resulted in producers with barley supplies reluctant to release those stocks and in turn caused the feedlots to bring in US corn stocks.

 

Corn production in Canada during 2006/07 was pegged by Wang at 8.800 million tonnes compared with 9.461 million in 2005/06.

 

Total domestic usage of corn in Canada during 2006/07 was expected to hit 12.300 million tonnes compared with 11.112 million in 2005/06, Wang said.

 

The decline in US corn imports will also be related to the fact that corn futures in the US have been steadily rising amid lower acreage ideas, Jubinville said.