Canada Markets

I find China's import data astounding, with year-over-year increases in some commodities being hundreds of percent higher. The following data represents the year-over-year change in imports from January through to the end of October:

Note that Canada's soybean YTD imports are 91,705 mt, down 69.69% from the same 10-month period last year, but only account for 0.2% of China's total soybean imports.

Attached is a chart of Canada's calendar year exports of wheat and canola to China over the past 12 years as supplied by Statistics Canada. Note that 2012 data includes exports up to the end of September only. Both wheat and canola exports indicate growth over the past year, as indicated by the data shown above. (Note that Canadian data was generated on a calendar year basis for comparison with China's import data, which is also presented on a calendar year basis).

One interesting point is that 271,210 mt of canola was exported from Canada to China in the month of September, with October through December shipping data yet to come to complete the calendar year. There is a very real chance that 2012 exports may come close to rivaling the 2009 peak of 3.1 mmt. China's insatiable appetite for oilseeds will certainly increase the need to ration sales to more price-sensitive buyers given Canada's short canola crop.

I've always been fascinated with the scope of the challenge involved in growing food production to meet an ever-growing population. An opinion column in a Financial Times Special Report (ft.com/reports) titled The Future of the Food Industry, just released Wednesday, suggests that regardless of all the issues the globe is facing in today's news, there will be 200,000 more mouths to feed tomorrow on the planet. The writer estimates that as much food will need to be produced in the next 40 years, as has been produced in the past 8,000. Perhaps no country feels this pressure as does China, with 2011 data suggesting a population of 1.3 billion people.

An article from EINNEWS.com titled China -- bumper grain harvest, states that China's 5.5 mmt of corn imports in the 11/12 crop year was more than double the amount of the 10-year average and has prompted a significant response to increase domestic production in that country. At the same time, a Syngenta representative stated that within 15 years, the country will need an additional 80 to 100 million metric tonnes of corn annually to meet their needs. The Chinese Agriculture Minister is on the record indicating concerns over the possibility of a future lack of water, a lack of land, and unbelievably, a lack of labor, which will be required to meet future needs.

Just some of the current activities that have been undertaken to meet these needs include:

-- Approval of the use of hybrid seed.

-- Increased focus on crop management, such as pests and weed control, which can rob up to 20% of the yield.

-- Education surrounding cropping practices surrounding seeding and harvest.

Besides the challenges as stated by the Chinese agriculture minister, other challenges faced are simply getting this information to the producer level as well as eliminating competition from counterfeit seed marketers who offer inferior varieties at lower cost.

There is a very good and real reason that Australia has named this to be the Asian century!

Cliff can be reached at cliff.jamieson@telventdtn.com

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