The unfortunate answer to this question simply is: We don't know.

The origin of a lot of the special language of the camps is still a mystery at this point and one that is likely not going to be solved with absolute certainty ever.

One theory is that it was Canada because Canada was seen as a land of plenty but why it was Canada and not the "Vereinigte Staaten" or the "Amerika Kommando" could have to do with the alliteration, with the great depression or something else. The same way, it is a bit unclear how these terms of the Lagerszpracha came to be in consistent use throughout virtually the entire Concentration Camp system. I mean that it is pretty clear that it spread with prisoners being sent to different camps but some terms proved so pervasive despite the difference in national and social composition of the prisoner population that there were the same in virtually every camp.

There are several historical analysis of the Lagerszpracha as well as whole dictionaries in various languages but the origins of some of the terms remain shrouded in historical mystery. The term Kanada proved so persuasive that even the SS started using it and all explanations by former prisoners point to Canada being associated with wealth and plenty. Why on the other hand it wasn't the US or – let's say – Urugay, is impossible to say.

Other examples from the Lagerszpracha that continue to defy explanation of their origins would be "Achtzehn" (eighteen) for danger, "Caracho" for doing something fast, Gummi (Gummy) for matraces, the usage of Kapo instead of foreman or something else or the term for a prisoner close to the end of their life "Muselmann" (an old fashioned and not really appropriate German term for a Muslim). While all these terms have some kind of explanation as to why they were used, why exactly these terms were in usage throughout the entire system instead of another term is impossible to say. They just caught on.