U.S. corn and dried distillers grain are expected to play an important role this year in keeping a lid on feed prices
American corn is flowing into southern Alberta at a brisk rate because of a shortfall in domestic feedgrains.
Corn is currently cheaper than the traditional barley ration used in Alberta feedlots.
Imported corn and dried distillers grain will play an important role this year in keeping a lid on feed prices, said Tom Dowler, director of business development at Gowans Feed Consulting.
His company recently hosted United States Commodities LLC, North Dakota Corn Growers Association, Midwest AgEnergy, Gavilon, Lighthouse Commodities and U.S. Grains Council members who met with feedlot owners to talk about feedgrain market potential.
The U.S. is anticipating a 250 million tonne corn harvest this year, and it does not take much to supply the Canadian market.
This fall’s cold, wet harvest could release more feed wheat and barley. Tough damp grain will be forced into the feed market as quickly as possible.
While Alberta feedlots are familiar with adding corn and DDGs to rations, this is the second year in a row they have sought extra feed as part of their risk management plans, said Dowler.
“I think it will continue to flow into Alberta in a big way,” he said.
The U.S. Department of Agriculture says Canada has purchased 605,000 tonnes of DDGs and 1.44 million tonnes of corn in the 2017-18 marketing year. With a bumper crop expected this fall, corn will be competitively priced against Alberta barley, which is in short supply.
DDGs are appearing as well but typically trade at a 10 to 20 percent premium to corn and barley, said Dave Guichon of Ag Value Brokers in Calgary.
“Historically we don’t go net deficient in southern Alberta. They are usually self-sufficient until December and early January,” said Guichon.
“This year we went net deficient right away and we started pulling corn in right way. It never stopped.”
U.S. corn has been arriving in 100 car unit trains since last November, and orders are booked forward into next spring.
“It just continued through the summer because of the drought that was sustained in southern Alberta. There is a reduced crop in southern Saskatchewan and southern Alberta. Carryout numbers for barley were very tight and of course we had to continue to use corn in the ration,” he said.
Large amounts of corn arrived in 2002-03 because of drought and a failed crop in Western Canada. Guichon estimates about three million tonnes of corn entered Western Canada at that time.
This year it is only appearing in southern Alberta and a limited amount in Saskatchewan.
Feedlots are looking at least-cost rations and availability of a product, whether it is barley, feed wheat or corn.
“When barley gets in tight supply, we can bring in large volumes of corn and it becomes easy to source it and price it. Corn has additional value working off the corn futures,” Guichon said.
Barley acreage is down and more is being exported to places like China and Japan.
“We are not growing enough barley to supply all our needs. We would be close to it if we didn’t have an export market,” he said.
“This last year due to the drought in Australia in particular and the continued issues they have had, reduced crop size has opened the door for Canada to ship barley to Japan and China and other countries,” he said.
Prairie farmers have turned away from barley in favour of better paying crops such as peas, lentils, canola and other specialty crops. Better yielding wheat and durum have enhanced their bottom line rather than growing feed barley.
“We need to grow more barley, and now that peas and lentils are out of sync with poor prices and oversupply, maybe they will be swinging more acres back to barley and wheat,” Guichon said.