Canada Markets

Given how significant corn imports are to the Western Canadian feed grain markets and how vastly different the situation is from three short years ago, I wanted to provide an update and a brief outlook.

In short, the economics still aren't working compared to recent history. As you can see by the accompanying chart, exceptional exports to various countries throughout the world have soaked up the bulk of available corn supplies, leaving little to work its way up into Canada. At competitive enough rates, anyway.

U.S. corn export inspections are running 29% above year ago levels while total export commitments (accumulated exports plus outstanding sales) are 27% higher compared to USDA's current annual projection looking for a 13.4% increase. The USDA estimate is likely to be increased in Thursday's World Agriculture Supply and Demand Estimate (WASDE) update. In effect, the lack of available supplies from global exporting countries have forced importers to buy from the U.S., outbidding Canada along the way.

Adding to the tight supply situation in Canada, the same global factors have resulted in an increase in corn exports from Eastern Canada with Ireland emerging as the top destination. Other European Union members round out the list of top four customers. According to the CGC weekly grain statistics report for week 43, corn exports have hit 2.533 million metric ton (mmt) already compared to 1.042 mmt last year.

In its May update, Agriculture and Agri-Food Canada (AAFC) revised 2024-25 corn ending stocks down by 400,000 mt thanks to a reduction in imports and increase in exports while reduced feed use was offset by increased industrial use. That takes their annual import estimate down to 2 mmt from 2.979 mmt last year while exports were increased to 2.7 mmt from 2.112 mmt last year. The cut to Feed, Waste & Dockage of 150,000 mt takes the 2024-25 total down to 9.325 mmt from 9.905 mmt last year, reflecting the lack of corn available to feed in Western Canada.

The result has been a slow but steady increase in feed values in Western Canada. According to PDQ, southern Alberta feed barley values have increased from a low of $248.61 mt ($5.41 per bushel) set in late August to $308.10 ($6.71) as of June 6. The Alberta government's weekly market update pegs Lethbridge barley at $315-320/mt ($6.86-$6.97). Given corn is over $7.85/bu by comparison, it is no wonder imports have been slow.

The anemic corn imports could end up being all that much more problematic given the fact that last summer's barley crop wasn't all that much larger than it was in 2021-22. According to Statistics Canada, the 2024-25 production totaled 8.144 mmt compared to 6.984 mmt three years ago -- only 1.160 mmt larger. Yet, U.S. corn imports into the Prairie provinces for the marketing year to date are running 3.056 mmt less. In the first eight months of the marketing year following the 2021 drought, the three provinces imported 3.826 mmt of corn from the U.S. compared to just 770,570 mt over the same period this year. That might really start to matter before the end of the marketing year.

Current expectations for a slight reduction in seeded area of barley adds to anxiety levels given the dry spring that is inspiring comparisons to 2021's drought. A significant portion of the prairie provinces received less than 40% of normal precipitation between April and May. Extended forecasts keep calling for rain to provide relief, but so far fail to produce as the events near.

At this rate, increased production potential of corn for both the U.S. and Canada will be monitored closely as it may be desperately needed.

With that, keep in mind I'm always happy to get feedback along with any suggestions for future blogs.

Mitch Miller can be reached at mitchmiller.dtn@gmail.com

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