June 29, 2009

Canada demand for US DDGS grows on poor crop conditions

Poor crop conditions in Canada have increased demand for US distiller's dried grains with soluble (DDGS), the US Grains Council (USGC) said Thursday (Jun 25).

The council said about 31,500 tonnes of US DDGS were purchased on June 17 for the third quarter by Rycom Trading Ltd., Canada's largest DDGS importer.

Lower moisture levels due to lower-than-normal precipitation in Western Saskatchewan and Eastern Alberta have resulted in poor crop conditions, leading to increases in the price of barley, western Canada's main source of feed.

Farmers are concerned about poor crop, which has caused them to lock up their bins and not sell, said Ryan Slozka, senior trader at Rycom.

Poor weather has also caused inadequate pasture conditions, with Western Canada currently in its slowest feeding time for cattle and feedlots are near half capacity, said Slozka.

As more cattle are sent to the trough due to the lack of pasture, feedlot demand has the potential to continue increasing significantly, he said.

Western Canadian feeders rely heavily on US DDGS said Slozka.

He said they will wait and see if crop conditions improve in western Canada, but as long as cattle feeders continue to see good results in feeding US corn DDGS, the upward trend in demand is expected to continue.