Canada Markets

Canada's merchandise trade for May surprised, with total exports coming close to the record set prior to the latest recession.

Despite the move higher in the Canadian dollar, total exports rose 3.5% in May, totaling $44.2 billion as compared to the $44.5 billion exported in July of 2008. This comes after a 2.8% dip in the month of April.

The country's trade deficit was slashed to $152 billion in May, well below the $300 billion estimated by economists. This is down from a $961 billion deficit in April, while there have been only 3 monthly surpluses since the start of 2012.

Of total exports, $2.722 billion, or 6.2%, was attributed to the Farm, fishing and intermediate food products category, which appears to be a monthly record for this export group. At $719.1 million, wheat exports is also a monthly record, while canola's monthly exports were $441 million, as reported by seasonally adjusted, balance of payment tables reported by Statistics Canada. The other crop products category totaled $454.3 million.

Looking at export data for some of the smaller crops, lentil movement was impressive at 224,787 mt for the month of May. This represents a record monthly export volume with only four months indicating monthly export volumes above 200,000 in the past four years. This crop year to-date, Canadian lentil exports are 1.44 million metric tonnes, ahead of the pace required to meet the 1.6 mmt export target set by AAFC. Exports should be on pace to exceed the 1.638 mmt record set in 2012/13.

Mustard exports for the month of May totaled 13,820 metric tonnes, the largest volume since November and the second highest monthly volume this year. Crop-year to date exports total 114,820 mt, with exports on pace to achieve the 130,000 mt export target set by AAFC, above the 120,000 mt exported last year and would be the highest level of exports since the 2008/09 crop year when 130,800 mt were shipped.

Canary seed exports for the month of May totaled 14,522 mt, the second highest monthly exports this crop year. Total exports this crop year total 128,212 mt, which should easily be on track to meet the 143,000 forecast released by AAFC in June, while ahead of the 137,000 mt shipped last year. The five-year average is 155,200 mt.

Sunflower exports totaled 4,205 mt in May, with crop-year to date exports totaling 41,777 mt, which should be on track to achieve the 50,000 mt target set by AAFC in June. This would be the highest annual exports since 2008/09 when 88,000 mt were reported by Statistics Canada.

This month's export data comes as the Canadian dollar moved from a low of $.91 CAD/USD to a high of $.9375 during the month, after reaching a $.8815 CAD/USD low in March. Despite the Bank of Canada's efforts to keep a lid on our country's currency through carefully crafted speech, the loonie made a move above $.94 in the recent week. Investors who have bet against the loonie are being weeded out, with last week's CFTC data indicating that investors held a net-short of 5,320 contracts, after holding a net short of 70,327 contracts in late January. Investors have been net-short the Canadian dollar since February 2013, holding an average net-short position of 36,891 contracts in that time frame.

Improved exports in some of the smaller crops also come despite the challenges faced by shippers of smaller crops with respect to rail service. While railways have greatly enhanced volumes moved overall, small-volume shippers as well as those requesting south-bound movement continue to face issues.

We'd like to with all of our U.S. neighbors a safe and happy July 4 celebration!

Cliff Jamieson can be reached at cliff.jamieson@dtn.com

Follow Cliff Jamieson on Twitter @CliffJamieson

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