Saskatchewan's exports to show steady growth through 2011, says EDC

OTTAWA, Nov. 18 /CNW/ - Hit hard by recession in 2009, Saskatchewan's international exports are forecast to show modest but steady growth of 7 per cent in 2010 and 9 per cent in 2011 according to a provincial forecast by Export Development Canada (EDC).

"Saskatchewan's export outlook is anything but modest at the industry level," said Peter Hall, Chief Economist, EDC. "Explosive growth in energy and fertilizer shipments was held in check by a double-digit drop in agri-food exports."

The agri-food sector accounts for 37 per cent of Saskatchewan's exports, and is forecast to decline by 13 per cent this year before rebounding by 5 per cent in 2011.

"Global supply constraints have pushed up grain and oilseed prices this year," Mr. Hall said. "However, higher prices are small solace for local operations given the extreme wet weather conditions in southern Saskatchewan this year that decreased seeded area and increased abandonment. This will result in a 14 percent decline in the production of grains and oilseeds in 2010."

"In 2011, wheat and coarse grain prices are unlikely to remain at their current highs, given that record production in the U.S. and Australia will almost offset the declines in Canada, Russia, and Ukraine, and ending stocks will remain at comfortable levels through 2010 and 2011," Mr. Hall said.

"Exports of canola seed could face a signficant hurdle, with Chinese officials confirming that shipments bearing traces of blackleg can only be delivered to crushing facilities in areas where Chinese rapeseed is not grown. The processing segment of the industry does, however, face a more favourable outlook, with China set to raise its canola oil imports from Canada substantially this year and new crushing capacity coming on line in Clavet and Yorkton."

The energy sector accounts for 33 per cent of the province's exports, and is forecast to jump by 26 per cent in 2010, to be followed by 2 per cent growth in 2010.

"While Saskatchewan's oil production profile is stable over the next two years, export earnings received a welcome boost this year from the rising price of crude," Mr. Hall said. "Growth will be muted in 2011 given the tame outlook for prices and volume shipments." 

EDC's forecast notes that rising light crude output out of Bakken will be offset by sustained declines in conventional production of heavy oil due to the maturity of the Western Canada Sedimentary Basin. Higher oil prices should help lift drilling activity from the depressed levels of 2009, though it will take time for additional capacity to come online.

Fertilizers account for 17 per cent of the province's exports, which are forecast to increase by 19 per cent in 2010 and 31 per cent in 2011.

"Fertilizer exports will outperform in 2010 and 2011 given soaring global demand," Mr. Hall said.  "The ranks of the middle class are swelling in emerging markets at an extraordinary pace. This is putting pressure on world food supplies and encouraging farming on more marginal land. That land needs lots of fertilizer, and will for years to come." 

"If not for a doubling of export volumes in 2010, the recent steep correction in the price of potash would pull exports firmly into negative territory. Canpotex's growing shipments to India and other Asian importers do signal an impressive revival of buyer interest, and the anticipated demand from China suggests a genuine recovery into 2011."

Canadian exports are forecast to rise 12 per cent in 2010 and 6 per cent in 2011. Nationally, economic growth is expected to rise 3 per cent in 2010 and 2.2 per cent in 2011. Internationally, EDC is forecasting global growth of 4.3 per cent in 2010 and 3.9 per cent in 2011. EDC's Global Export Forecast is available at http://www.edc.ca/gef.

EDC's semi-annual Global Export Forecast addresses the latest global export conditions including perspectives on interest rates, exchange rates as well as export strategies to help Canadian companies minimize risk. It also analyzes a range of risks for which exporters should be prepared.

EDC is Canada's export credit agency, offering innovative commercial solutions to help Canadian exporters and investors expand their international business. EDC's knowledge and partnerships are used by more than 8,400 Canadian companies and their global customers in up to 200 markets worldwide each year. EDC is financially self-sustaining, a recognized leader in financial reporting and economic analysis, and has been recognized as one of Canada's Top 100 Employers for nine consecutive years.

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Export Development Canada
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