Canada Markets

Between 2007 and 2015, Canada's annual soybean production has increased eight consecutive years, an increase of 3.549 million metric tons or 132%, according to Statistics Canada data. This rapid increase has not hampered the country's ability to clear inventories, with the current pace of exports ahead of last year and above average volumes.

This week's Statistics Canadian International Merchandise trade data for February, which covers the first half of the September-through-August crop year, showed 274,170 metric tons shipped during the month, the second lowest volume shipped this crop year and slightly below the same month in 2015. At the same time, cumulative exports total 3.308 mmt, 10.8% above year-ago volumes and 18.8% above the three-year average. Movement of 877,600 mt in October and 982,000 mt in November helped place cumulative exports on a fast track in comparison to past years, as seen on the attached chart.

After the first half of the crop year, 80.7% of AAFC's 4.1 mmt export target has been reached. Over the last three years, an average of 79.9% of total exports have been shipped in the first six months, suggesting that even an average pace of movement over the balance of the crop year could surpass the 4.1 mmt target.

A scramble for stocks may also be seen through the balance of the crop year, with the soybean crush also slightly ahead of the steady pace needed to reach the current AAFC crush target of 2 mmt. Statistics Canada's upcoming March 31 stocks report will be watched closely.

The high U.S. dollar has negatively affected U.S. export potential, with today's USDA export data for the week ending March 31 indicating total cumulative sales are 8% below last year while shipments were reported to be 7% behind year-ago volumes.

Of interest is the range of countries Canadian soybeans are shipped to. While the most recent USDA WASDE report estimates that China will import 82 mmt of the 128.16 mmt of global imports, totaling 64.4%, Canada's cumulative exports to China this crop year total 1.108 mmt, or just 33.5% of the cumulative total through the first half of the 2015/16 crop year. While this is up from the 21.3% of export volume shipped to China in 2014/15, this still suggests a well-diversified customer base.

Despite the strong U.S. dollar, exports to the United States in the first six months of the crop year total 173,634 mt, down 39% from the same six-month period in 2014/15. This represents just 5.2% of the total volume shipped in this period.

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

Follow Cliff Jamieson on Twitter @CliffJamieson

(ES)

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