U.S. DDGS Demand in Canada on the Rise

(AP) June 26, 2009 - Three hundred fifty cars containing approximately 31,500 metric tons of U.S. distiller’s dried grains with solubles (DDGS) were purchased on June 17 for the third quarter by Canada’s largest distiller’s grains importer, Rycom Trading Ltd.

Lower moisture levels due to lower-than-normal precipitation in Western Saskatchewan and Eastern Alberta have resulted in poor crop conditions, causing an escalation in the price of Canadian barley, western Canada’s main source of feed. “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,” said Ryan Slozka, senior trader at Rycom. “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.”

U.S. Grains Council Consultant in Canada Neil Campbell met with Slozka following a recent agricultural golf event where cattle farmers asked Slozka many questions on the relative value of DDGS compared to barley. He received positive feedback from those who currently utilize U.S. DDGS in their feed rations. “Due to weather conditions, the price of barley in Lethbridge has shot up C$30 per ton to $195 per ton. U.S. DDGS is currently trading for C$216 per ton delivered, which is now 111 percent of the barley price compared to 130 percent previously,” said Campbell.

In 2008, Canada imported 772,000 tons of U.S. DDGS, up 453,000 tons from 2007, making Canada the largest market for U.S. DDGS. Rycom also tendered 115 cars (approximately 10,000 tons) of U.S. DDGS per month for August and November. “Western Canadian feeders rely heavily on U.S. DDGS and now possibly whole corn, which we are watching closely. 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,” said Slozka

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