Ag feeling market volatility

Farm Credit Canada chief agricultural economist J.P. Gervais says ongoing market volatility is having a noticeable impact on the Canadian agriculture industry, and what it amounts to is a net negative in exports for producers this year over last.

 

“In the short term this volatility is negative for Canadian agriculture,” confirms Gervais, “but I do think it has some very specific examples of how it can actually make a case there are some positives there. I identified soybeans as one. Canola is another perhaps. But overall volatility has dampened (Canadian) exports.”

 

FCC recently released its report entitled “Navigating Trade Disruptions and Volatility.” The report looks at five major agricultural commodities Canada exports in large quantities – canola, wheat, pork, beef and soybeans -to examine how high levels of market volatility produced by the ongoing trade war between the United States and China, oversupply in some commodities and Futures Market speculation has impacted Canadian agricultural exports.

 

Gervais reports while canola and wheat exports have been fairly bulletproff thus far when it comes to movements in the marketplace, (ranging between a 2.8-per-cent drop in some export markets to a higher decline of 7.6 per cent in others), pork and beef exports have taken huge hits this year. Pork export declines ranged between 2.9 per cent to as much as 30 per cent year over year in some of Canada’s major export markets. Beef exports have dropped between six per cent and 21 per cent in major export markets. Only Hong Kong is bucking that trend, recording an 11-per-cent increase in imports of Canadian beef this year over last.

 

Soybeans are the only one of the five commodities measured which had a marked net increase in exports, up by as much as 18 per cent to Spain and 3.7 per cent to China, for example. But even that push upward does not convey the whole picture, says Gervais.

 

“I do believe selling more at a lower price is not always a good thing,” states Gervais. “In this case, given the extent of the decline in the soybean price, given that the Canadian price is not adjusted as much to compensate, and the dollar has remained pretty much in that narrow range of $0.76-$0.78 US, I do think overall the impact has been negative from a revenue standpoint.”