Canadian demand for US DDGS continues to grow

By Hope Deutscher | June 03, 2009
Report posted July 1, 2009, at 2:05 p.m. CST

Approximately 31,500 metric tons of U.S. distillers' dried grains with soluble (DDGS), in 350 rail cars, were purchased on June 17 by Canada's largest distillers grains importer, Rycom Trading Ltd.

Western Canada's main feed source is barley, however, lower moisture levels in western Saskatchewan and eastern Alberta have resulted in poor crop conditions. "Farmers are concerned they may not get their crop in or the crop they do get will yield very little, which has caused them to lockup their bins and not sell," Ryan Slozka, a senior trader at Rycom, said. "Poor weather has also caused inadequate pasture conditions. Western Canada is currently in its slowest feeding time for cattle and feedlots are near half capacity. As more and more heads are sent to the trough due to the lack of pasture, feedlot demand has the potential to continue to increase significantly."

Neil Campbell, a U.S. Grains Council consultant in Canada, recently met with Slozka, where cattle farmers questioned the relative value of DDGS compared to barley. "Due to weather conditions, the price of barley in Lethbridge has shot up CA$ 30 per ton to CA$ 195 per ton," Campbell said. "U.S. DDGS is currently trading for CA$ 216 per ton delivered, which is now 111 percent of the barley price compared to 130 percent previously." Slozka has heard positive feedback from cattle producers who are currently using U.S. DDGS in their feed rations.

Canada imported 772,000 tons of U.S. DDGS in 2008, up 453,000 tons from 2007. Canada was the second largest market for U.S. DDGS in 2008.

Slozka said western Canadian cattle producers are relying heavily on U.S. DDGS and possibly whole corn. "We will wait and see if crop conditions improve here in western Canada, but as long as cattle feeders continue to see good results with feeding U.S. corn DDGS, we anticipate this upward trend in demand to continue," he said.

Headquartered in Washington, D.C., the U.S. Grains Council is a private, non-profit partnership of farmers and agribusinesses committed to building and expanding international markets for U.S. barley, corn, grain sorghum and their products.