Export group sees rosy future as demand for commodities grows

Up 13 percent this year A weaker Canadian dollar and rebounding American economy is spurring demand

Analysts at Export Development Canada are projecting a large increase in the country’s agri-food exports this year, despite the railway logjam that has left many grain bins across Western Canada full.

“We’ve had ships sitting off coast in B.C. for quite some time now. They’re waiting for what it is that they need,” said Peter Hall, EDC’s chief economist.

“There’s some weather reasons why that movement hasn’t happened, but the transportation industry as a whole is very animated around making sure that logjam gets cleared and we believe that by the end of this year much of it will be.”

Customers of Canada’s primary agricultural products may be concerned about the delay, but the country’s reputation as an exporter hasn’t been irreparably damaged, he said.

“The ships have stayed there,” Hall said of shippers waiting at Canadian ports, many of whom have been waiting for weeks if not months.

“If they had other places to go, they would’ve gone there… For the moment, the demand is still there for what it is that we have. We’ll still be able to sell it; it’s just too bad we don’t have the capacity to move what was grown in the last year.”

In its most recent global export forecast, the federal crown corporation is projecting agri-food exports to rise 13 to 15 percent this year in each of the three prairie provinces following last year’s bumper crop.

The organization is projecting a smaller increase for the sector next year, closer to two percent.

Factors that have challenged the transportation system — a large crop, increased traffic from the energy sector and weather — are temporary, he said.

“We always forecast a return to normal levels of activity,” he said.

“We’ve embedded that inside of our forecast, and that, together with moving the surplus that was created this year, still gives us two percent growth next year. It doesn’t sound like much, but it’s amazing to me that actually we can build on this year’s huge levels to the tune of two percent for next year.”

EDC expects commodity prices to soften but is generally projecting a positive outlook for the country’s economy, buoyed by a weaker Canadian dollar, a rebounding American economy and growing demand from emerging markets overseas.

Hall highlighted fertilizer and potash and agricultural equipment as two sectors that will benefit.

Hall is keeping a close eye on turmoil in Eastern Europe, which is an important market for machinery makers, and said tensions may slowly ease following this month’s election in Ukraine.

“We’re looking forward and saying, ‘I don’t care what you’re growing. I don’t care what you’re producing. I don’t care what you’re adding value to, it’s all looking like growth to me.’ ”