Canada Markets

Canada's September Merchandise Trade

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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September saw fewer agriculture exports from Canada overall, but dry pea exports were strong to China. The lentil export market was the largest monthly volume shipped since December 2016 and the largest September volume shipped in three years, with India and Bangladesh two of the top markets. (DTN file photo by Elaine Shein)

Canada's merchandise trade deficit with the world fell from $1.2 billion in August to $978 million in September, the smallest in three months, although surprised economists by being much higher than the $650 million deficit forecast by economists in pre-report estimates. Canada's imports fell by 1.7%, while exports fell by 1.3%.

Statistics Canada commentary points to the broad farm, fishing and intermediate food products category falling by 7.3% in September to $3.16 billion, the lowest dollar amount realized in seven months, with a sharp drop in canola exports the largest factor behind this data. Exports of low erucic acid canola were reported at 400,641 mt in September, down 41.6% from the previous month and the smallest monthly volume shipped since August 2013. The spot Canadian dollar rose 47 basis points over the month, the first higher monthly close in three months, making Canadian exports more expensive in U.S. dollar terms.

On a monthly basis, we look at trade data for various ag commodities and products, with a focus on products where weekly CGC data is limited.

Lentil exports in September were reported at 272,587 mt, the largest monthly volume shipped since December 2016 and the largest September volume shipped in three years. India is reported as the largest buyer, with 89,669 mt shipped or 32.9% of the total volume, with Bangladesh the next largest buyer. Cumulative exports this crop year are calculated at 387,062 mt (Aug-Sept), 24% higher than the same period in 2018-19 and the fastest start to exports in four years. This volume represents 20.4% of the 1.9 million metric ton export target set by Agriculture and Agri-Food Canada (AAFC), while ahead of the steady pace needed to reach this forecast.

Chickpea exports were reported at 5,383 mt in September, the smallest monthly volume shipped in 13 months. Over the first two months, 12,665 mt has been shipped, up 56% from the same period in 2018-19 and 7% below the five-year average for this period. Cumulative exports represent just 8.4% of the 150,000 mt export target set by AAFC, behind the steady pace needed to reach this forecast.

Dry pea exports are shown at 554,643 mt in September, the largest volume shipped in any month since September 2017 or two years. China was by far the largest buyer, with 86% of the volume shipped to this destination, which appears to be the largest monthly volume ever shipped to this destination. Cumulative exports are calculated at 667,957 mt, up 20% from 2018-19 although 19% below the five-year average for this period. This volume represents 19.6% of the current AAFC export forecast of 3.4 mmt, ahead of the steady pace needed to reach this forecast.

Mustard exports were reported at 8,518 mt in September, down only slightly from the previous month while representing the two smallest monthly volumes shipped in the past 12 months. Over the first two months of this crop year, 17,058 mt has been shipped, up 9.4% from the same period in 2018-19 and 98.4% of the five-year average for this period. Cumulative exports are lower than the steady volume required to meet the current AAFC total of 120,000 mt.

Flax exports totaled 6,746 mt in September, by far the lowest monthly shipments seen in the previous eight crop years checked, while well below the monthly of average 38,848 shipped in 2018-19. Late harvest may be a likely contributor to this date, with producers having delivered only 35,500 mt as of week 12, down 31.5% from the same period in 2018-19. Over the first two months of the crop year, exports are reported at 21,731 mt, 31.2% of the same period last crop year and just 32.5% of the five-year average. This represents just 4.3% of the 500,000 mt AAFC forecast for the crop year, behind the steady pace needed to reach this total.

Soybean exports for September, the first month of the row-crop crop-year, totaled 143,233 mt, the lowest monthly volume shipped in six months. For the third straight month, Iran was the largest buyer, with 38.4% of the volume shipped, with the next largest volumes shipped to Japan and Indonesia. September shipments represent 75.7% of the volume shipped in September 2018, while are 2.5% higher than the five-year average. Current exports total 3% of the current 4.7 mmt export forecast released by AAFC, behind the steady pace needed to reach this target.

Imports of soybeans have been a factor in Canadian markets over the past crop year, with a reported 1.1 mmt imported in 2018-19, up 112% from the previous year. AAFC is currently estimating imports to fall to 400,000 mt in 2019-20, while the September imports were reported at 35,358 mt. This is the lowest volume imported in three months and well below the 100,647 mt imported in September 2018-19.

Corn exports were reported at 18,826 mt in September, the lowest monthly volume exported in four years. Close to the entire volume was shipped to the United States, with no reports of Irish business that has played a key role in recent months. September shipments total just 22% of the volume shipped in September of 2018-19, while representing 40% of the five-year average. The September volume is well behind the steady pace needed to reach the current 1.5 mmt export target set by AAFC.

Corn imports totaled 198,632 mt in September, the lowest volume imported in six months. AAFC is forecasting Canada's corn imports to fall by 1.1 million metric tons to 1.7 mmt this crop year, with increased feed supplies in the west reducing the need.

Canola oil exports totaled 276,217 mt, close to unchanged from shipments in August. Movement is split, with China shipped 50% of the crude oil while the U.S. is shipped 94.5% of the refined oil. Total movement is 5.5% higher than the same period in 2018-19 and 20% higher than the three-year average. Favourable crush margins will likely result in continued record levels of canola oil exported in coming months.

Canola meal exports are reported at 385,895 mt in September, the lowest volume shipped in three months. The current volume is 6.4% higher than the same period last crop year and 7.5% higher than the three-year average.

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

Follow him on Twitter @CliffJamieson

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