Canada Markets

Canada's Exports Based on USDA Projections

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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This chart shows the percent change in estimated Canadian trade measured in volume (blue bars) along with the expected growth in global trade (brown bars) from 2016/17 (2016 for meat) through 2026/27 (2026 for meat) for grains and meat based on USDA's long-term projections. (DTN graphic by Nick Scalise)

USDA released long-term agricultural projections through to 2026/27 on Thursday without a great deal of fanfare. We live in a world where everything could change tomorrow, which may lend less credence to long-term projections that include a long list of assumptions. To highlight the challenges, the report states:

"Trade projections to 2026 are based on economic relationships and assumptions concerning trends in areas, yields and consumption. The development and use of technology and changes in consumer preferences are assumed to continue evolving based on their past performance and the consensus judgement of USDA analysts regarding future developments. The projections also reflect the effects of trade agreements, sanitary and phytosanitary restrictions, and domestic policies in place or authorized by November 2016. International macroeconomic assumptions use in the projections were completed in October 2016."

Between 2016/17 and 2026/27, global wheat trade is estimated to increase by 13.4%, or 23.3 million metric tons, to 197.5 mmt. USDA notes the fastest growth taking place in the developing nations of the world given a combination of rising population and income. An estimated 90% of growth in imports is seen in the Middle East, North Africa and West Africa, Southeast Asia and Bangladesh, also countries showing the fastest growth in consumption.

Canada's growth in exports is estimated to increase 12.6% between 2016/17 and 2026/27 to 24.2 mmt by 2026/17, close to the rate of growth in global trade as seen on the attached chart. USDA points to Canada maintaining a 12.3% share of total global trade over the period, while the United States is estimated to lose 1.3% market share to 13.9%. The European Union is expected to show the strongest growth, increasing share of the global trade by 4.9% to 19.3% of global trade at 38.1 mmt.

USDA reports a 28.9% increase in soybean trade over the period discussed to 179.4 million metric tons by 2026/27. Palm oil trade is also expected to rise sharply, and combined will be supportive for competing vegetable oils such as canola. From 2016/17 to 2026/27, Canada's contribution to world soybean trade is forecast to increase by 17.5% to 4.7 mmt, which does not seem much of a stretch from the 4.4 mmt that AAFC is forecasting from the current year. Among the major global suppliers, the U.S. share of global exports is forecast to fall from 40.1% in the current crop year to 32.6% by 2026/27. Brazil's market share is expected to rise from 42% this year to 50% in the same period.

USDA sees Canada holding barley exports steady through to 2026/27, while global trade is expected to rise a modest 5.2% from 2016/17 to 2026/27. USDA notes that malt barley premiums over the next 10 years will influence planting decisions in both Australia and Canada, although Canada's barley acreage will remain under pressure due to competition from canola.

USDA has estimated global meat consumption to increase by 1% annually, with the largest increase in consumption seen in developing nations. From 2016/17 to 2026/27, global beef shipments by major exporters is expected to expand by 20.5%, while Canada's expected growth in exports is estimated at a modest 1.2%. Global pork shipments by major exporters is estimated to increase by 12.7% over this period, while Canada's share is estimated to grow by 5.6% and along with the E.U., United States and Brazil, will remain among the world's largest exporter of pork.

DTN 360 POLL

The latest USDA oilseed forecasts point to canola meal imports in China skyrocketing, although imports of canola/rapeseed is lagging. Would you rather see the export of products (oil/meal) than bulk seed? You can share your thoughts on this week's poll that is found at the lower right of your DTN homepage.

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

Follow Cliff Jamieson on Twitter @CliffJamieson

(ES)

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