With the latest surge in corn prices, barley has regained its status as the cheaper feed ingredient for western Canadian cattle operations.
Last year’s record U.S. corn crop prompted a summer-long price slump in the commodity. Meanwhile, booming feed barley exports pushed the price of that crop higher.
“That gave the U.S. a significant advantage in feeding,” said Brenna Grant, research analyst with CanFax.
But soaring demand for corn combined with a poor start to the 2008-09 crop year, with extensive flooding and yield loss reported in the U.S. corn belt, have pushed prices up. It is now cheaper for western Canadian feedlots to use locally grown barley rather than import corn from the U.S.
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“It has only been in the last couple of weeks that we’ve seen barley be cheaper again,” said Grant, when comparing costs in terms of pound of gain.
The Winnipeg July 2008 barley contract price is 42 percent higher than the July 2007 barley contract, compared to a 95 percent increase in the Chicago July corn contract over that same period.
Corn’s spiralling cost should make Canadian feeders more competitive with their U.S. counterparts because more barley is consumed in Canadian feedlots.
“It gives an opportunity for Canadian producers,” said Grant, although she noted feeders south of the border still have better access to huge stockpiles of distiller’s grains, which are the cheapest feed ingredient around.
The changing dynamic between barley and corn should also help stem the tide of Canadian feeder cattle shipped to the U.S, she said.
In 2007, 516,103 Canadian feeder cattle and calves were exported to the U.S., up 78 percent from 2006. The pace has increased in the first half of 2008. From Jan. 1 to June 14, another 340,909 animals were sent to the U.S., up 69 percent from the same time last year.
Grant said cheaper feed is just one reason why Canadian feeder cattle have been stampeding south. Another draw is the July 15 cutoff date for U.S. country-of-origin labelling rules, after which any meat from feeders sent south will have to be identified as Canadian.
She believes the combination of barley becoming a more competitive feed ingredient and the passing of the July 15 deadline will slow feeder exports.
Soaring corn costs should also put the brakes on corn imports. CanFax estimates the Canadian livestock industry brought in 2.4 million tonnes of U.S. corn in 2007, up from the previous year but well below the record of 3.9 million tonnes imported in 2002.
Grant expects little corn will be imported in the remainder of 2008.
The problem is cattle feeders can’t count on increased domestic barley production to make up for the expected slowdown in corn imports. Growers seeded 9.3 million acres of the crop in 2008, down 16 percent from last year’s plantings, according to Agriculture Canada. Production is expected to fall by 584,000 tonnes.
Grant said more research should be done on boosting barley yields so that whatever acreage is planted in the future is more productive.
