An Alberta grain broker says the decision to feed corn or barley to cattle this fall will come down to price.
Dave Guichon of Ag Value Group in Calgary advises producers to work out the decision on pencil and paper rather than basing it on emotion or history.
“It’s all based on price.”
Most of Alberta’s feedlots switched from traditional barley to cheaper imported U.S. corn last winter. If the weather returns to normal this year and farmers produce a good grain crop, feedlots will also return to feeding barley, he said.
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Expectations are for lower prices for American corn and Canadian barley in the new crop year.
The United States Department of Agriculture has forecast an average farm price of $1.90 to $2.30 US per bushel, compared to $2.25 to $2.35 for the current year.
Agriculture Canada forecasts a barley price of $120-$150 Cdn per tonne in the new crop year compared to $165-$185 in the current year.
Last winter’s experience with imported corn showed feeders they have another feed option. If barley prices rise again, feedlot operators won’t hesitate to switch to corn.
“Most people by and large said, ‘super, feeding corn isn’t hard at all,’ ” Guichon said.
“If corn becomes cheaper, they’ll have no problem switching over.”
The same thing happened in 1993 when feedlot operators learned to feed wheat after the price dropped. It has since become another feed option.
Agriculture Canada estimates 4.4 million tonnes of corn will be imported from the U.S. in the current crop year. In the new crop year, corn imports are expected to fall by about 55 percent to two million tonnes, mainly due to higher Canadian barley production, which is forecast to climb to 13.28 million tonnes from the 7.28 million harvested last fall.
Price is definitely crucial at Cor Van Raay Farms of Iron Springs, Alta., one of Canada’s largest feedlots.
“What we feed in the fall will be strictly based on price of the product,” said Colleen Van Raay.
“If corn were to continue to be cheaper than barley, then we would certainly feed corn in the fall. If we were to have a good crop this summer, I would imagine the price of barley would be better than corn, therefore we would be feeding barley.”
Last winter corn was $5 to $10 a tonne cheaper than barley, a big difference to a feedlot’s feed bill.
“It’s really just a matter of price.”
Guichon said some feedlots have already pre-booked supplies of barley for the fall, but there have been no bookings of corn because they think current prices for fall-delivered corn are too high.
Feedlot operators who bought U.S. corn also like the fact they had to deal with only one supplier instead of buying from several barley producers.
“They did note it sure streamlined the accounting and administrative side of their business.”
Western Feedlots was one of the few large operations that didn’t switch to corn last year.
Stephen Pain, the company’s general manager of commodity trading, said the decision didn’t create a financial disadvantage.
While corn was cheaper for part of the winter, he said there wasn’t a dramatic difference over the entire winter feeding season.
“Essentially the barley didn’t cost a whole lot different than if we had been on corn. Over the long haul, as long as we have access to good quality barley, we really didn’t see a whole lot of difference over feeding corn.”
Western Feedlots has developed a specialized barley-buying program to ensure a steady supply of high-quality grain. Barley contracts with farmers throughout Alberta have given Western a good supply of barley throughout the season.
The switch to corn by many Lethbridge area feedlots also freed up barley that normally would have been fed in those feedlots.
“It’s been a trying year at times,” Pain said.
“Since January things have eased off considerable, and the supplies seemed respectable.”
Still, Pain is looking forward to a return to normal weather and more traditional levels of barley production.
“I remain fairly positive, as long as the weather holds, we’ll return to a more normal corn-barley basis and you would see barley return to a more normal state.”
In its May 12 outlook, the USDA used the March planting intentions report and 1960 to 2001 trend yield calculations to project a record corn crop of 10.06 billion bushels or 255.54 million tonnes, up 26.7 million tonnes or about 12 percent from last year.
Because of stronger exports and domestic use, especially in ethanol production, U.S. corn stocks at the end of 2003-04 are expected to climb by only 6.2 million tonnes and remain fairly tight in an historical context.
