January 14, 2013
US drought continues to affect Canadian feed grains
Canadian feed grains continue to be affected by the US Midwest drought with US corn possibly coming North and Canadian calves possibly heading south.
No one would have predicted in late summer the possibility of Canadian
livestock heading south for feeding nor USfeed grains coming to the better-supplied Prairies.
However, a combination of tight barley and bullish farmers is making some parts of the Prairies a more expensive place to feed an animal than in the drought zone.
"Feeding in Canada is every bit as expensive as feeding in the US,"said Jim Beusekom of Market Place Commodities. "There''s a possibility that feeder cattle will actually start heading south again."
Errol Anderson of Pro Market also thinks Canadian animals could be shipped into drought zones because feed is turning out to be cheaper than expected there as corn demand dies.
"A lot of the guys from Calgary and south, feed cattle in Kansas as much as they do up here,"said Anderson, who thinks prairie barley is overpriced. "They will go wherever it works best. Ultimately, barley pricesare going to have to break."
Anderson said he is receiving reports that hog producers in southern Manitoba are already importing UScorn because it is cheaper than local feed grains. The practice could spread if domestic feedgrain prices stay high.
"We''re going to be extremely tight, but if this corn price continues to drop and if the economics allows it, southern Alberta will start bringing in corn, too,"said Anderson.
He said farmers tend to be over-bullish during short-supply situations because they do not realise high prices can kill demand.
Beusekom said prairie farmers should not assume the stock situation will keep getting tighter and today''s prices will keep going higher. Today''s prices already factor in most of the bullish factors, he said.