September 18, 2007

 

Tight Canadian barley supplies to spur corn imports from US 

 

 

Tightening feed supplies in Western Canada and a strengthening Canadian dollar will result in a larger-than-normal amount of US corn being imported during the 2007-08 crop year, which runs from August 1 to July 31, industry sources said.

 

"Imports of US corn in comparison to the 2006/07 crop year will still be slightly lower, but the gap between the two seasons has been narrowing," Joe Wang, a coarse grain analyst with the Market Analysis Division of Agriculture and Agri-Food Canada said.

 

Wang estimated 800,000 tonnes of US corn would be imported into Western Canada during 2007/08 and 1.2 million tonnes of US corn would be brought into Eastern Canada.

 

The 2 million tonnes of US corn imports compares with earlier projections that started off at 1.7 million, and which later jumped to 1.9 million tonnes, he said. During the 2006/07 season, 2.1 million tonnes of US corn were imported into Canada. On average 650,000 tonnes of US corn are imported into Western Canada, Wang said.

 

Tight feed barley supplies in Western Canada and strength in the Canadian dollar were cited as reasons for the pick up in US corn imports, Wang said.

 

The tight feed barley supplies were linked to the fact that exports of feed barley from Western Canada would be up from previous years, he said.

 

Private exporters have estimated that 800,000 to 1 million tonnes of feed quality barley were sold to offshore customers when it appeared the Canadian Wheat Board (CWB) would lose its monopoly on marketing barley in Western Canada. The CWB has since retained that monopoly through a federal court judge's order, but will allow those sales to be honoured.

 

"The economic incentives are there for end-users such as feedlots to bring US corn in as feed," said Mike Jubinville, an analyst with the farmer advisory service ProFarmer Canada.

 

Jubinville said most of the US corn imports into Manitoba were for the hog industry.

 

"Manitoba's hog sector generally imports about 300,000 tonnes of US corn each crop year," he said.

 

"We've got the Canadian dollar at the strongest levels in 30 years and the cost of barley in Western Canada over US corn is at a US$30 to US$40 premium, both very attractive incentives," Jubinville said.

 

However, the problem at hand is the railway logistics, he said.

 

Both the Canadian and US rail systems are being maximized at the moment with the movement of the fall harvest in Western Canada and in northern tier states, Jubinville said.