July 5, 2007

Canada's corn imports from US may increase on high Canadian barley prices

The high price of barley in western Canada could result in increased imports of US barley by Canadian feeders, according to an Alberta feed grains broker. However, he said there was no US corn being booked just yet.

Dave Guichon, of Feedlot Strategies, said feed barley is currently priced at C$195 per tonne in Lethbridge for July and August, which compares to the cost of bringing up US corn of roughly C$175 to C$180 per tonne. US corn "will come up if barley prices remain this high," said Guichon, although he added that "people just won't switch in a heartbeat."

Guichon said most feedlots had ample barley supplies for the time being and would likely not look to switch their rations until the new crop of cattle starts coming to the feedlots in the fall.

"If prices stay as they are, we'll bring a million tonnes of corn up," said Guichon. However, he expected the price of barley had peaked and would eventually come down to compete with corn.

Guichon said that some Canadian ethanol producers were already bringing in US corn to supplement their feedstock due to the high cost of wheat. Cattle feeders are also bringing in dried distillers grain from the US, and are using it as filler in up to 20 percent of their rations, he said.

Guichon added that there were a couple of complicating factors that could determine how much US corn actually makes its way into Canadian feedlots. He noted that barley prices could stay high if the Canadian Wheat Board does lose its monopoly on barley exports, causing Canadian feeders to compete directly with the international market for supplies. If barley prices stay high in Canada he thought feeders could bring in more US corn. However, the cattle might also be moved to the US to be fed there, as 50 percent of Alberta's beef production already goes for export, said Guichon.

The quality of the Canadian wheat crop will also play a part in determining how much US corn is imported, as the feedlots could turn to feed wheat if there are large supplies of poorer quality wheat available, said Guichon.