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WINNIPEG, Manitoba (Reuters) - The U.S. Food and Drug Administration has stopped canola meal from ADM Agri-Industries' crushing plant in Lloydminster, Alberta, after it detected salmonella bacteria, adding to a problem that has sharply cut canola meal exports to Canada's top market.
The Lloydminster plant is the second ADM plant in Canada to be placed on the FDA's import alert list, which allows inspectors to detain shipments without physically examining them, according to the FDA's website. ADM's plant in Windsor, Ontario, was placed on import alert for salmonella in canola meal on December 18.
The FDA now has six major Canadian crushing plants on its import alert list.
ADM spokesman Roman Blahoski said the company would comment later in the day.
Salmonella can cause food-borne illness in humans. However, canola meal is shipped to the United States for use in livestock feed, especially in the California dairy industry.
Canada is the world's top exporter of canola, which is crushed mainly for its oil.
Canada exported roughly 812,000 tons of canola meal from August through September, the first six months of the 2009/10 crop year, down 16 percent from the year-earlier period.
Shipments to the United States are down 41 percent to nearly 549,000 tonnes, but volumes have more than quadrupled to Mexico (117,000 tonnes) and spiked to 140,000 tonnes to Asia from 2,000 during the first half of the crop year, according to Statistics Canada.
Shipping off-shore is less profitable for Canadian exporters than selling into the United States, but the differential is narrowing with lower freight rates and strong Asian demand, said Dave Hickling, vice president of utilization for the Canola Council of Canada.
Nearby canola futures turned lower after the news before recovering, but the dip was likely due to the Canadian dollar approaching parity with the U.S. currency, said Keith Ferley, an investment adviser and canola futures trader with RBC Dominion Securities in Winnipeg.
"Everybody knows we're struggling with these (meal) exports and don't see an end to it anytime soon," he said.
ICE Canada May canola was up 0.1 percent on Monday morning.
Shares of Archer Daniels Midland, the parent company of ADM Agri-Industries, were down 0.7 percent on the New York Stock Exchange.
Three other plants on the import-alert list are owned by Bunge Ltd and one is owned by Viterra Inc. The FDA placed all six plants on the list in the past seven months.
The FDA did not post on its website the date that it stopped ADM's shipment.
The Canadian government and the country's canola crushers are working on a document outlining best management practices in line with new feed-safety regulations that the FDA is developing.
Hickling said he's hopeful that meetings with the FDA over the next two to three months will assure the U.S. regulator that Canadian crushers are reducing the risk of salmonella contamination.
Editing by Walter Bagley and Jim Marshall