The United States is filled to overflowing with corn and some of it is leaking across the border to feed western Canadian cattle.
A record 11.7 billion bushel corn crop south of the border has pushed down its price, catching the attention of feed grain buyers in southern Alberta’s huge feedlot industry.
“From what I’ve been told of what prices are, and the separation between corn and barley in the Lethbridge area, I’m certain U.S. corn will start flowing in,” said Jeff Ball, president of the Alberta Cattle Feeders’ Association.
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Several other feedlot operators and barley industry officials interviewed last week said they knew of U.S. corn already arriving in the area.
David Bekkering of TFS Expanse Feedlot in Hays, Alta., said U.S. corn is available for $115 per tonne shipped in by rail and trucked to the feedlot in the Lethbridge area.
That compares favourably with the $114 per tonne price for feed barley, given corn’s energy advantage.
Bekkering said with prices that close, most feeders would probably stick with local barley, but if the gap grows much wider, that will change.
“People won’t switch for a buck, but they’ll switch for five bucks,” he said. “If it gets to three, four or five bucks, it’ll start happening big time.”
He said the amount of U.S. corn that goes north will be determined by what price local sellers of barley and feed wheat are willing to take.
“If they’re unwilling to sell at lower prices, it will happen. If they’re willing to sell, it won’t happen,” he said, adding that corn prices will drive the southern Alberta barley market over the next few months.
Asked if the feedlot industry feels any obligation to buy barley from local suppliers, Bekkering said that people in the cattle industry can’t afford to think that way.
“I don’t think there’s any loyalty in it right now,” he said. “Everybody has tight margins.”
Brian Otto, a feed barley producer from Warner, Alta., said he wouldn’t expect feedlot operators to give special treatment to barley growers.
“I try to do things that are cost effective for me, like buying fertilizer at the cheapest price I can find,” he said. “If corn is an advantage for the feedlots and works for them, then I won’t fault them for going to corn rather than barley.”
Otto added the entire southern Alberta feed market remains in a state of uncertainty, as buyers and sellers alike continue to adjust to the impact of BSE and border restrictions.
Lots of cows have to be fed this winter and lots of feed barley, wheat and corn will be looking for a home. The market will dictate what happens, he added.
Ball has done the calculations on the costs and benefits of incorporating corn or feed wheat into the ration at his Brant, Alta., feedlot.
“Right now there’s no real incentive to move off straight barley at this point,” he said.
