Canadian Crops May Help Backfill U.S. Demand

By CnAgri2012-09-17 19:50:08 Print

Bigger Canadian production of corn and soybeans this year stands to backfill a small part of U.S. demand for those crops, after the Midwest drought slashed U.S. production. According to Reuters, Canada is a minor producer of both crops on the global stage. The Midwest drought also extended to Ontario, curtailing potential production of corn and soybeans in the province that is Canada's biggest grower of each.

But even though volumes are small compared to the billions of bushels harvested annually in the Midwest, nearby Canadian supplies are in a good position to fill part of the U.S. shortfall between supply and demand.

"We're hoping more go down to the U.S.," said John Pauch, coarse grains analyst at Agriculture and Agri-Food Canada in Winnipeg, adding that more than usual Canadian corn may end up feeding livestock in New York state, Michigan and Pennsylvania, and possibly further south.

Searing summer drought slashed U.S. corn production to the lowest level in six years and soybeans to the lowest in nine years, the U.S. Department of Agriculture forecast on Wednesday, although its corn estimate was larger than expected, reports Reuters.

A similar opportunity opened for Canadian corn two years ago. In 2010-11, Canadian corn showed up as far away as Spain and the Middle East after a poor Ukraine corn crop, Pauch said. To fill demand in the U.S., however, Canadian corn will be competing with supplies from Brazil and elsewhere, he said.

U.S. livestock feeders are likely to import a modestly larger volume of Canadian corn and soybeans, but they should also draw supplies out of the U.S. Northern Plains and ration demand to deal with the drought, said Dax Wedemeyer, broker and analyst at U.S. Commodities in Iowa.

Canadian soybeans are on course for a record-large 4.4 million-tonne harvest, with corn output looking to reach 11.7 million tonnes, up about nine per cent from last year.