American DDGS may plateau in Canadian rations

Dried distillers grains with solubles (DDGS) imported from the US are accounting for more and more of the cattle feed rations in Western Canada.

 

Canada imported 633,647 tonnes of DDGS in 2008-09, according to Statistics Canada data, up from 607,535 tonnes the previous year and well above the five-year average of 319,178.

 

Imports of DDGS have increased significantly in the past few years, as US ethanol production has also increased leaving more of the cheap feed ingredient to be marketed.

 

Significant volumes of DDGS are coming into southern Alberta from the US ethanol sector. Many feedlots were booked with DDGS through December after making purchases over the summer.

 

The large US corn crop, together with the fact that the ethanol business is picking up, will mean that the resulting DDGS will need to go somewhere.

 

Brokers expect they would continue to be priced into Canadian rations, especially as the good Canadian harvest weather will likely result in less feed wheat in Western Canada.

 

Since DDGS only makes up 15-20% of the ration the market may have reached its plateau, also because the number of cattle on feed in Western Canada has been on the decline.

 

US-based DDGS traders however still believe that there is room for more DDGS in Canadian feedlots, because there are still operators that have not used DDGS in the past.